Introduction

In the Fall of 2022 and Winter of 2023, media outlets reported on a significant increase in the number of contracts awarded to the consultant firm McKinsey & Company (McKinsey) by the Government of Canada.^[1] One CBC article indicated the firm had made 30 times more money from federal contracts in the seven years since the 2015 election than it had in the nine years preceding it, with the vast majority taking place since 2020.^[2]

On 18 January 2023, the House of Commons Standing Committee on Government Operations and Estimates (the OGGO Committee) held a meeting under Standing Order 106(4) and agreed to undertake a study of contracts awarded to McKinsey. The Auditor General of Canada and the Procurement Ombud also began external reviews of this issue, with the President of the Treasury Board and the Minister of Public Services and Procurement performing an internal review.^[3]

It was in this context that, on 14 February 2023, the House of Commons Standing Committee on Transport, Infrastructure and Communities (the Committee^[4]) adopted the following motion:

That, pursuant to Standing Order 108(2), the Committee undertake a study examining the role of McKinsey & Company in the creation and the beginnings of the Canada Infrastructure Bank, with an examination into the hiring decisions around former McKinsey & Company staff and the consulting contracts awarded to McKinsey & Company by the Canada Infrastructure Bank, examining their effectiveness, management and operation, including the value and service received by the Canada Infrastructure Bank; that the relevant evidence and documents received as part of the Standing Committee on Government Operations and Estimates’ study into Federal Government Consulting Contracts Awarded to McKinsey & Company be considered in the committee’s study; that the committee schedule meetings to receive witness testimony from the current and former CEOs of the Canada Infrastructure Bank, including the current and former members of the board of directors, and the Minister of Infrastructure; and that the study be comprised of at least four meetings.

On 4 May 2023, the Committee adopted the following motion to issue summonses to certain witnesses, including to McKinsey and CIB officials, a decision the Committee took after several declined to participate in the study:

That, pursuant to Standing Orders 108(1) and (2), in relation to the committee’s study examining the role of McKinsey & Company in the creation and beginnings of the Canada Infrastructure Bank (CIB):

• a)      summonses be served on Dominic Barton, past Global Managing Director of McKinsey & Co.; Andrew Pickersgill, past Managing Partner of the Canadian Practice of McKinsey & Co.; Janice Fukakusa, Inaugural Board Chair of the CIB; Bruno Guilmette, past Interim Chief Investment Officer and Board Director of the CIB; Steven Robins, Head of Strategy; Bill Morneau, former minister of Finance; Patrick Brown, mayor of Brampton, and Lisa Raitt, Vice-Chair of Global Investment Banking at CIBC requiring each of them to appear at dates and times to be fixed by the Chair;
• b)      the Committee strongly urges Annie Ropar, past Chief Financial Officer of the CIB, the Honourable Dominic LeBlanc, Minister of Infrastructure, and Aneil Jaswal, Director, Sector Strategies to appear; and
• c)      That the study comprise a total of four meetings in addition to the Tuesday, May 2, 2023 meeting, with a maximum of six witnesses per meeting.

Between 2 May 2023 and 8 June 2023, the Committee held seven meetings on this subject. It heard from twenty-three witnesses.

The Influence of Consulting Firms on Public Policy

McKinsey & Company (McKinsey) is a global management consulting firm, established in 1926 and active in Canada for over 50 years^[5] with a history of working with previous federal governments.^[6] According to Robert Palter, Senior Partner, Office Managing Partner for Canada with McKinsey, “McKinsey has the number one rated infrastructure advisory practice, as assessed independently by Kennedy Consulting.”

Mr. Palter testified before the OGGO Committee that the Government of Canada spent “approximately $25 billion on external consultants” in the fiscal year 2022–2023. Diane Therrien, Senior Research Officer at the Canadian Union of Public Employees, indicated that McKinsey “has received at least $116.8 million in federal contracts since 2015.” She expressed deep concern with the policy influence exerted by consultants, arguing that they lack expertise in municipal infrastructure or government service delivery, and have an inherent preference towards the interests of shareholders, rather than those of the public.

John Cartwright, chairperson of the Council of Canadians, echoed her concerns and argued that global accounting and consultancy firms, for whom “(s)uccess is measured in billable hours and the complex deals that are trumpeted regularly”, have been working to shift ownership of infrastructure from public to private interests. Aneil Jaswal, Director of Strategies Sectors at the CIB, similarly identified a difference between the public service, working “on things that deliver impact for the public, for Canadians”, and the private sector, in which “you are sometimes working on different objectives of helping a company sell more of its product or achieve growth.”

Andrew Pickersgill, senior partner with McKinsey, provided a different perspective, describing McKinsey’s commitment to “pro bono work and giving back to the local community”, including a $2 billion commitment “to social responsibility efforts by 2030.”

Increase in Federal Contracts to McKinsey & Company

When asked why McKinsey has seen an increase in federal government contracts since 2015, Mr. Palter pointed to the growing “complexity of the challenges facing the government”, and suggested that his firm’s “global expertise on how others have dealt with those challenges” can provide needed support. Mr. Palter added that the request for proposals (RFPs) to which McKinsey responded, “were competitively offered, procured, and evaluated independently by the government.”

He further added three points to illustrate the competitiveness of the federal government’s process in awarding contracts. First, that McKinsey’s contracts represent less than 0.5% of the federal government’s total spending on external consultants. Second, that 74% of McKinsey’s contracts with the federal government were awarded through a competitive process, with proposals being made in response to calls by the government and then independently evaluated and scored. And, finally, that the federal government rejects roughly 60% of the bids it receives from McKinsey.

Mr. Barton made a similar comment in relation to the scale of McKinsey’s contracts with the federal government: “I'm not saying $100 million isn't a lot—in that last fiscal year of 2022, $22.2 billion was given to different consulting firms.” Meanwhile, CIB representatives Ehren Cory, Chief Executive Officer, and Steven Robins, Group Head of Strategy, also pointed to the competitive processes established in procurement policies for the Government of Canada in general, and for the Canada Infrastructure Bank (CIB) in particular.

McKinsey representatives made clear that their firm’s contracts with the federal government were obtained in response to requests for proposals made by the government.^[7] Mr. Pickersgill told the Committee that “McKinsey doesn't pitch in the Government of Canada. We respond to requests for proposals. We describe our expertise. We follow all procurement guidelines”.

When asked whether he had attended meetings for the purpose of presenting McKinsey as a desirable vendor to the Government of Canada, Mr. Pickersgill responded: “When invited to describe our credentials and our expertise, of course I do that.” When asked, in the context of McKinsey having provided pro bono support to the Advisory Council on Economic Growth, whether he often sees consulting firms doing volunteer work for government, Michael Sabia, former Advisory Council member, replied: “Yes, I do see that from time to time.”

Mr. Pickersgill confirmed that McKinsey is not a registered lobbyist. He also confirmed that no engagements between McKinsey and the Government of Canada were registered with the Office of the Commissioner of Lobbying of Canada.^[8]

Consulting Firms and the CIB

Specifically in relation to the use of external consultants by the CIB, Ms. Therrien stressed the need for accountable and transparent low-cost financing to municipalities, arguing that this cannot be achieved when consultants like McKinsey are primarily accountable to their shareholders. Similarly, Mr. Cartwright suggested that it is reasonable to expect that corporate entities will seek to shift public policy in their own interest: “there's no such thing as free money. Somebody doesn't come along and give you $26 billion for free. There are strings attached. They want a huge return on investment.”

Mr. Cory stated that the CIB’s financial statements track expenditures on external advisory services under two categories. The first, “investment-related external advice,” refers to services such as transaction advisors, power market advisors, and legal advice. The second, “corporate external advice” refers to specialists such as auditors and human resources specialists. In explaining the CIB’s need for outside consultants, he indicated that the “vast majority” of money spent falls under the first category, and relates to expertise needed for specific infrastructure projects. This expertise, he further added, could not be maintained internally, given the variety of projects with which the CIB is involved.

One example that Mr. Cory provided is the Lake Erie Connector project^[9], which required an analysis by a third party firm. He confirmed that this analysis is proprietary but indicated that the CIB’s website provides “the thesis for why we made the investment”.

The Design and Effectiveness of the Canada Infrastructure Bank

The Canada Infrastructure Bank (CIB) was announced in the 2016 Fall Economic Statement as a way to attract private sector investment in Canadian infrastructure. It was established as a Crown corporation the following year by the Canada Infrastructure Bank Act (CIBA).

According to section 6 of the CIBA, the CIB’s purpose is to

invest, and seek to attract investment from private sector investors and institutional investors, in infrastructure projects in Canada or partly in Canada that will generate revenue and that will be in the public interest by, for example, supporting conditions that foster economic growth or by contributing to the sustainability of infrastructure in Canada.

The CIB’s Corporate Plan Summary, 2020–21 to 2024–25 lists the corporation’s three responsibilities as advising on, investing in, and developing knowledge and research about new infrastructure investment in Canada. The CIBA authorizes the CIB to contribute to infrastructure projects through equity investments, loans and loan guarantees. It also provides a budget of up to $35 billion.

In May 2022, the Committee presented its report entitled The Canada Infrastructure Bank, which was subsequently concurred in by the House of Commons on 26 October 2023. This report reflected witness testimony of the CIB’s slow progress in advancing infrastructure projects and included a single recommendation: “That the Government of Canada abolish the Canada Infrastructure Bank.”

While acknowledging a “fairly slow start”, Mr. Sabia told the Committee that he considered that that the CIB was “really beginning to hit its stride.” Several other witnesses referred to a positive change over the past two years.^[10] Mr. Cory specifically referred to the Committee’s report, pointing out that that particular study had taken place in March 2021. He reported that, as of his testimony before the OGGO Committee on 6 February 2023, 27 of the CIB’s projects had reached financial close, of which 19 were in active construction.

While acknowledging that no projects had yet been completed, Mr. Cory argued that “(i)nfrastructure projects, by their definition, take time to engineer, design and build.” He further added that the purpose of the CIB was not to finance “shovel-ready projects”, but rather projects that are “truly shovel-worthy but stuck.” Mr. Cory added that some projects are shorter or longer than others, ranging from multiple years to 24 months. He said explicitly: “These are long-term investments we're making in our country.”

Some witnesses referred to the idea behind the CIB of leveraging or attracting more private investment, even at a 5:1 ratio, through lower-interest public loans.^[11] Ms. Therrien argued that this focus on attracting private capital was not in the initial concept of a Canadian infrastructure bank, but was the result of the influence of consultant firms like McKinsey and BlackRock. She also referred to the promised 5:1 ratio as “pie in the sky,” suggesting that over the past five years, “the bank has been struggling to maintain even a 1:1 ratio of public-to-private dollars.”

As Patrick Brown, Mayor of Brampton (appearing as an individual) and Mr. Cory clarified, the CIB does not offer grants, but rather loans. A fully grant-based system, Mr. Palter argued, would be beyond the fiscal capacity of the federal government. Hon. Catherine McKenna, former Minister of Infrastructure and Communities (appearing as an individual) estimated the CIB to be “a smart model. It's not for everything, but there's a limited amount of money so we need to figure out how to stretch it.”

Meanwhile, though he agreed that “tax dollars are finite”, Mr. Cartwright maintained that “every dollar diverted away from creating public assets and public infrastructure is a dollar misspent.” He recommended that the CIB be either abolished or, preferably, “reformed to focus solely on the public good” in order to maintain the talent and skill it has already attracted. Ms. Therrien was also “cautiously optimistic” about reforming the CIB, rather than abolishing it. She recommended that the initial proposals for the CIB prior to the involvement of external consultants, be revisited, shifting the focus to low-cost financing for infrastructure projects, rather than attracting private capital.

Meanwhile, Hon. Lisa Raitt, Co-Chair of the Coalition for a Better Future (appearing as an Individual), stated that “Canada has to use every lever it possibly has to ensure there is the adequate financing of projects necessary for our economic growth”, which includes government funding in various possible forms. She added, however, that in her estimation, “a lot more could have been accomplished in the period of time since 2015, and with the same outcomes, through the vehicle of (Public-Private Partnerships) Canada.”

Measurement of Success

On the question of how best to measure the CIB’s success, Tamara Vrooman, chairperson at the Canada Infrastructure Bank, stated that its ”role is to get infrastructure built more quickly than it would be otherwise. The measure of our success will ultimately be that the infrastructure is in use for the benefit of Canadians.” Mr. Cory expressed a similar view, suggesting a two-fold measurement of success. Firstly, “getting more stuff built”, with a measurement in the “flow of dollars”. He pointed to the CIB’s current commitments of $9.7 billion on $27 billion worth of projects. His second measurement of success “is what outcomes that infrastructure delivers.”

CIB Procurement Process/Financial Transparency

Frédéric Duguay, General Counsel and Corporate Secretary at the CIB, explained that, as a Crown corporation, the CIB is not subject to Treasury Board policies and regulations governing procurement activities. It is therefore responsible for establishing its own procurement policies. These, he told the Committee, “follow best practices in public-sector corporate governance to ensure that purchases are made in a fair and transparent manner and the CIB receives the best value for goods and services.” Mr. Duguay also clarified that the CIB’s current procurement process was approved by the CIB’s board of directors in January 2019, after the CIB’s first two contracts with McKinsey, which will be discussed further in this report.

Mr. Cory, in his testimony before the OGGO Committee, assured members that the CIB currently has “very clear procurement policies around best value for money.” Mr. Pickersgill and Mr. Barton both stated that McKinsey had followed appropriate procurement processes in its dealings with the CIB.

Conflict of Interest policy

Mr. Cory also described the CIB’s conflict of interest policy, which applies to all employees and covers both real and perceived conflicts of interest. Mr. Duguay added that the CIB’s directors are subject to the Conflict of Interest Act. He further explained steps taken to ensure that directors are not involved in decisions in which they may have a conflict. Directors are provided a project list in advance of board meetings to allow them to identify potential conflicts and recuse themselves. In such a case, the director in question would not receive any materials relating to the discussion or vote.

Internal Audit Process

Mr. Cory explained that the CIB’s audit process includes both internal and third-party reviews of all financial statements. Mr. Duguay added that the internal audit process includes an annual risk-based audit plan, which covers both governance and compliance with policies, including procurement. He also indicated that the CIB is subject to annual audits by the Auditor General of Canada, in addition to a joint external auditor, and to a special examination requirement every ten years.

The Creation of the Canada Infrastructure Bank

Origin

As several witnesses told the Committee^[12], the concept of an infrastructure bank was included in the Liberal Party of Canada’s 2015 election platform.^[13] The Hon. Bill Morneau, former Minister of Finance (appearing as an individual) suggested that the concept “was a long time in development,” as he had himself, in 2012, been involved in efforts by the Government of Ontario to establish an independent pension organization for the purpose of consolidating smaller pension funds to invest in infrastructure. Some witnesses also pointed to international examples of similar organizations, notably in the United Kingdom and Australia,^[14] with Mr. Cory referring to the concept of an infrastructure bank as “really ubiquitous”.

Mr. Cartwright suggested that the proposal of an infrastructure bank was “an attempt by the Liberal government to replace the discredited Public-Private Partnerships Canada established by Stephen Harper”. Mr. Morneau, however, denied this reasoning, telling the Committee that the purpose was to attract capital investments in Canadian infrastructure, adding that “[i]t wasn't criticizing what had come in the past. It was ramping up so that we could be much more impactful in the future.”

When asked whether McKinsey had any involvement in designing the Liberal Party of Canada’s 2015 platform, Mr. Palter replied “No.”

In 2016, an Advisory Council on Economic Growth (hereinafter, the Advisory Council, though some witnesses also referred to it as the growth council) was established by then-Minister of Finance, the Honourable Bill Morneau. The Advisory Council, which was comprised of 14 business and academic leaders, made recommendations among which was the establishment of an infrastructure bank.^[15]

As Janice Fukakusa, inaugural board chair of the CIB (appearing as an individual), related in her testimony, the Canada Infrastructure Bank was subsequently announced in the Government of Canada’s Fall Economic Statement 2016^[16] The Canada Infrastructure Bank Act was included in the Budget Implementation Act, 2017, No.1, which received royal assent on 22 June 2017.

In her testimony, Ms. Therrien suggested that the initial focus of the infrastructure bank as it was proposed in 2015 was “to provide low-cost loans to local governments to finance new public infrastructure and strengthen their communities”. However, she alleged that a change had taken place by the time the Canada Infrastructure Bank was established:

After McKinsey’s and its affiliate BlackRock’s involvement in the development of the CIB, there was a major shift in mandate. The objective shifted to focus on leveraging private capital to finance infrastructure projects, and to invest and seek to attract investment from private sector investors and institutional investors, which would supposedly generate revenue.

Mr. Cartwright echoed this concern, speaking of a “closed door meeting with top officials and McKinsey and BlackRock that helped shape some of the thinking around CIB.” He also referenced a report published by the Canadian Union of Public Employees, which found that “[i]n effect, the Liberal government turned over bank design and development to the very investors who would profit most from it: the largest private sector and pension investment funds in the world, such as BlackRock.”^[17]

The Advisory Council

Mr. Morneau told the Committee that the purpose of the Advisory Council was to provide the Government of Canada with “advice and ideas on long-term economic policies that could advantage Canada.” When asked why he chose to rely on an external advisory council rather than the public service for this type of advice, he replied that his government wanted “to make sure we had advice from all sectors of the economy as we considered our economic plans.” Mr. Barton also indicated that he had previously participated in similar advisory councils in 2010 and 2013 at the request of, respectively, then-Prime Minister Stephen Harper, and then-Minister of Finance Jim Flaherty, suggesting they were not uncommon.

Mr. Sabia recalled the purpose of the Advisory Council being “to enhance Canada's potential rate of economic growth, particularly on a per capita basis.” Mr. Morneau confirmed that one of the topics considered by the council was the idea of an infrastructure bank, as had been proposed in the 2015 election platform, to determine “how best we might be able to activate that.”

Dominic Barton, who was McKinsey’s director of global affairs at the time, was selected by then-Minister Morneau to be chair of the Advisory Council. Mr. Barton clarified that he took on this position as a private individual, not in his capacity as a McKinsey representative. He added:

This is voluntary work. I think we were given one loonie for each year that we did it, but it was an honour to serve the country. There was zero aspect of this being an opportunity for McKinsey.

When asked how long he had known Mr. Barton when he selected him to be chair, Mr. Morneau replied:

I didn't know Dominic. I certainly knew of Dominic's strong reputation as one of Canada's leading international business people. I had pretty limited exposure to him prior to my time in office. I can't remember if I'd ever actually met him, but certainly I was delighted that he was willing to come on board and be part of our advisory council.

Mr. Barton described his role within the 14-member Advisory Council as being “to make sure we were covering the right areas and that we were able to get specific and actionable programs the government could review.” He recalled the group’s “key drivers” in relation to infrastructure being Mark Wiseman, Michael Sabia, and Ken Courtis.

Mr. Sabia confirmed that he served on the Advisory Council on a volunteer basis, with his primary employment remaining as the CEO of the Caisse de dépôt et placement du Québec (CDPQ). Mr. Morneau, while indicating he had no specific recollection of asking Mr. Sabia to join the council, confirmed that he “held Michael Sabia in high regard and would have been supportive of him joining the advisory council because of the expertise he brought to the table as a former public servant and as someone who had been a CEO.” Mr. Sabia indicated that he had “no specific recollection” of signing documents committing him to avoiding real or perceived conflicts of interest, but that such a step likely took place as “it would be a normal course of activity.” In the discussion around perceived conflict of interest, Committee members also had questions around whether Mr. Sabia’s role on the Council may have later had influence on the first investment of the CIB in a transit project managed by the CDPQ. This is discussed in greater detail later in this report.

McKinsey’s Pro Bono Work

According to Mr. Pickersgill, in 2016, the Advisory Council “approached McKinsey to see if we’d provide pro bono support, and I helped lead that team and coordinate our expertise from around the world.” Mr. Sabia, Dominic Barton, Former Global Managing Director of McKinsey & Co (appearing as an individual), and Mr. Pickersgill described the McKinsey secretariat team as playing primarily a research role for the council members. All three witnesses told the Committee that the McKinsey employees were not responsible for providing recommendations. Mr. Barton stated that “It was agreed to up front with the Deputy Minister and Minister of Finance that we were doing this, so it was all clear.”

Mr. Barton added further that “the deliberations were done only with the council. There was no one from McKinsey in those sessions.” When questioned about his own presence in deliberation sessions, as both chair of the Advisory Council and McKinsey’s director of global affairs, he replied:

Yes. I was the chair of the council, moving things forward. I don't think that had any linkage to what the secretariat team was doing. Every single member of the council would have had some sort of potential conflict, if you will, but I didn't see any issue with that, nor did the secretariat that we were working with.

Mr. Barton suggested that the “very serious debates” that took place among “a group of very strong-minded individuals” guarded against these potential conflicts of interest.

The secretariat team was provided by McKinsey on a pro bono basis, meaning that they were paid by McKinsey, at no charge to the Advisory Council.^[18] When asked how many people were involved and what the value of their participation was, Mr. Barton replied: “I don't know. I have no idea what that was. That wasn't the point of it. It was just about getting support. No cost-benefit analysis was done.”

Starting Up the CIB

According to Mr. Sabia, following the recommendation that an infrastructure bank be created, neither he, nor the Advisory Council, played a role in establishing the Canada Infrastructure Bank. Mr. Morneau also told the Committee that, following the appointment of Dominic Barton as chair, he “had no exposure (…) to any decisions that the Canada Infrastructure Bank took on how it was going to determine the best way to execute its mission.”

The Committee heard from Ms. Fukakusa, who was the inaugural chair of the CIB’s board of directors, as of July 2017,^[19] and from Bruno Guilmette, who served first as a member of the board, then as the CIB’s interim chief investment officer from December 2017 until June 2018.^[20] In effect, Mr. Guillemette was the CIB’s first, and for a time its only, employee.^[21] He indicated that his “priorities were to establish the foundation for the Canada Infrastructure Bank's investment function, including the development of investment criteria and project evaluation criteria.” According to Ms. Fukakusa, in these early stages of the CIB’s establishment, she “received support from Infrastructure and Communities Canada, in particular the CIB transition office”, with her principal contact being the assistant deputy minister, Glenn Campbell.

Both Mr. Guilmette and Ms. Fukakusa pointed to the need for hiring external consultants, given their task of establishing a new infrastructure bank from the ground up with minimal initial staff. They told the Committee that a number of consulting firms were considered (Ms. Fukakusa recalled specifically approaching “McKinsey & Company, the Boston Consulting Group and PricewaterhouseCoopers”), before hiring McKinsey.

Initial Hiring of McKinsey

According to Mr. Cory and Ms. Fukakusa, the CIB’s initial procurement process allowed invitational procurement, without a formal request for proposals (RFP). Ms. Fukakusa indicated that fewer than three bidders were permitted under this initial process, “in the case of urgent necessity.” She explained that three bids were initially received, from McKinsey, Boston Consulting Group and PricewaterhouseCoopers. However, she explained that the latter “didn't have the scope or the capacity”. She justified the use of the "urgent necessity” provision by explaining:

there was a lot of funding available, but without having proper governance around how the money was being decisioned and spent, we couldn't be positive, given the independent board we had at the time, that we were making the right decisions on behalf of Canada.

Hon. Amarjeet Sohi, former Minister of Infrastructure and Communities (appearing as an individual), told the Committee that the CIB’s day to day decisions were independent by design. As such, he indicated that he wouldn’t have been involved or aware of this process. Mr. Morneau also testified that he was not aware of the contracts or procurement processes of the CIB.

According to Ms. Fukakusa, McKinsey was selected at that time, “(o)n the strength of (their) infrastructure advice and practice,” for two contracts, for a total value of $940,000. Mr. Cory, who was also formerly a partner at McKinsey, provided his opinion that “McKinsey is not a surprising choice for that, given the range of their experience in infrastructure work and their global reach.”

Contracts 1 and 2—January and March 2018

The first contract between McKinsey and the CIB was for the purpose of providing advice on investment criteria.^[22]Its value was $390,000.^[23]Mr. Duguay explained that the Minister of Infrastructure had provided the board of directors with a statement of priorities and accountabilities as a basis for drafting the CIB’s corporate plan. McKinsey was selected to assist the board in developing a definition of “investment criteria,” a further step towards establishing this corporate plan, which would then allow the CIB to begin making investment decisions.

Mr. Palter explained that McKinsey reviewed international examples to arrive at a “set of specific operational choices needed for the CIB to accept project proposals.” McKinsey consultants then presented design options which were reviewed and approved by the board of directors.

The second contract, awarded in March 2018, focused on the development of a governance and risk management policy,^[24] for a value of $550,000.^[25] Mr. Palter explained that McKinsey consultants looked at international best practices and identified 47 types of potential risk in order to develop structures, systems and processes to manage them.

Email With List of Potential Names

Some witnesses were asked about an email exchange in 2018, in which Mr. Pickersgill provided Ms. Fukakusa with a list of names for potential hire by the CIB. Mr. Palter contextualised this list, indicating it was sent in the early days of the CIB when Ms. Fukakusa “was in the market looking for people, and she asked us if we had any relationships with qualified people who could potentially be hired into the CIB as staff.”

Mr. Pickersgill and Mr. Palter both stressed that the individuals recommended in the email were not McKinsey employees, but rather “senior advisors” who, based on their own experience, provide contracted advice to McKinsey. These senior advisors, Mr. Palter further explained, are covered by McKinsey’s conflict of interest policy. Excerpts from this email exchange were read out to Mr. Pickersgill and Mr. Palter by a committee member. These excerpts included one in which Mr. Pickersgill would have suggested to the CIB the idea of loaning a McKinsey Engagement Manager for 4–6 months, as well as the following passage: “Lots of ways to do this including remaining on our books but loaned to you, paid direct by you and on your books, comes with occasional McKinsey bursts of support like we’ve contemplated in Risk and in Phase 2 Mandate work, or just comes stand alone.”

Ms. Fukakusa told the Committee that she had made several requests “across the network” for names of qualified candidates to establish a candidate pool. She clarified that no one on the McKinsey list was hired by the CIB (this was confirmed by Mr. Palter) and that candidates for senior positions were later found through a search firm.

Potential Conflicts of Interest

During their testimony, some witnesses were asked about a perceived conflict of interest in McKinsey receiving the first contracts with the CIB, considering the interactions between the firm and the Advisory Council that had recommended the bank’s creation, both through the pro bono secretariat and Mr. Barton. To this question, Mr. Morneau replied:

I was pleased, as I mentioned earlier, to have Dominic Barton take the role of chair of my advisory council. The fact that he did that on a pro bono basis was important, and I saw that as a good contribution to what we were trying to achieve.

I had no exposure following that to any decisions that the Canada Infrastructure Bank took on how it was going to determine the best way to execute its mission. I have no knowledge of any contract you're speaking of, so I really have no way to respond.

Mr. Cory replied that he didn’t see “anything untoward” in the way in which McKinsey’s contracts were awarded by the CIB. He added that he didn’t “think there is a direct relationship between the growth council and the hiring of McKinsey.” Mr. Palter and Mr. Pickersgill both indicated that the first contract was awarded 18 months after the Advisory Council had made its recommendations.

Mr. Pickersgill was asked specifically about a 2018 contract proposal in which McKinsey claimed to have a “deep understanding” of the CIB. He replied:

I believe we were speaking to our expertise globally, as Mr. Palter described, in our knowledge of other markets. That's why we were approached by the chair through a process that, as we heard from Mr. Cory, was competitive. It was based on our expertise.

On the same topic, Mr. Sabia referred to McKinsey’s international experience with infrastructure issues, including on increasing investment in infrastructure. He said that “(w)ith access to that kind of deep expertise, it was a way for us to save a lot of time in finding ways to accelerate the bank's activities.”

Mr. Cory sought to provide context by informing the Committee that the $1.43 million awarded by the CIB to McKinsey represented approximately 5% of its cumulative expense on professional service fees and constituted “specialized analysis that the CIB was not in a position to prepare on its own in those very early days of the bank's existence.” Both he and Mr. Guilmette indicated that they were satisfied with the value for money gained by McKinsey’s services.

Contract 3—May 2020

The third and, to date final, contract was awarded in May 2020 with a value of $490,000.^[26] Mr. Cory indicated the purpose of this contract was to obtain consulting services from McKinsey on how the CIB could “turbocharge its investment activity, and do that in light of the rapidly changing world it faced.” Two main contextual issues were identified in the contract: the COVID-19 pandemic and the green transition. He added that McKinsey’s work “was used to develop the $10 billion growth plan that was announced in October 2020^[27] to invest in major infrastructure initiatives.”

This third contract was awarded directly to McKinsey in a single-sourced process that Mr. Duguay indicated was “in accordance with the exceptions allowed under CIB policies in force and applicable free trade agreements.” Mr. Cory explained:

It was immediately in the aftermath of the shutdown of the infrastructure world. Given their global expertise in infrastructure, and given the first two studies they had done in 2018 and their understanding of the investment approach the CIB was taking, they were deemed a natural partner to that work, so that work was single-sourced.

Mr. Sabia maintained that, in order to accelerate the CIB’s progress, particularly through the growth plan, he considered it to be “quickest and most economical” to “use some of the people from McKinsey who had been involved in the initial thinking around the Infrastructure Bank, to draw on their accumulated knowledge of this so that we wouldn't have to start from ground zero.” He added that he considered the CIB’s successful improvements since then as evidence that this strategy worked.

On the question of McKinsey’s involvement in developing the growth plan, Mr. Cory clarified that, based on his review of the records, McKinsey provided “important insight” but that the idea of the growth plan originated from the CIB’s board of directors and management team. Mr. Palter, meanwhile, fully denied that McKinsey did any work on the growth plan, stating that their work in 2020 “was on the onset of COVID.” He added that McKinsey did not in fact finish all of the work originally envisioned in the 2020 contract, as only one of three potential phases were complete.

Number of Contracts

Some witnesses were asked to clarify the total number of contracts that had been awarded to McKinsey by the CIB since its inception. Mr. Dugay confirmed that, in response to an Order Paper question that asked for details on all contracts to McKinsey, the CIB had provided five invoices relating to work undertaken by McKinsey for the CIB. He acknowledged that this could lead to the conclusion that there had been five contracts, but maintained that there had been only three, with two each being divided into two phases.

During his testimony before the OGGO Committee, Mr. Cory similarly indicated that McKinsey has been awarded “three separate contracts” by the CIB, of which “(o)ne had two phases to it”. During his subsequent testimony before the (TRAN) Committee, he corrected himself, stating that two of the three contracts each had “a phase A and a phase B,” for a total cost across all contracts of $1.43 million. Mr. Palter and Mr. Pickersgill both indicated that McKinsey had undertaken three specific engagements or mandates with the CIB.

McKinsey Influence on the CIB

In reference to potential conflicts of interest in the interactions between McKinsey and the CIB, Mr. Cory acknowledged that there were “connections”, particularly with regard to former McKinsey employees (himself included) working at the CIB, and to initial advice provided by McKinsey to help establish the CIB. However, he did not believe these connections to be problematic, claiming these types of connections to be “natural”.

Ms. Fukakusa told the Committee that McKinsey did not provide any project-specific advice and confirmed that she would not have accepted such advice if it had been offered.

Mr. Morneau told the Committee that he had “no exposure at all to any commercial meetings with McKinsey during (his) entire time in office,” with the sole exception being through working with the Advisory Council. Mr. Barton similarly claimed to have had “no involvement whatsoever in any awarding of paid work to McKinsey by the federal government, including the CIB” since 1996. He also stated:

In joining the public service as ambassador to China in 2019, I underwent a thorough conflict of interest process with the Ethics Commissionerto ensure that my prior roles with McKinsey and elsewhere would not conflict with my public service obligations.

Shared Clients

In response to a question during his testimony before the OGGO Committee, Mr. Cory stated that he was not aware of any McKinsey clients who had received money from the CIB, but indicated that he was not sufficiently aware of McKinsey’s client list to provide a proper answer.

Mr. Palter told the Committee that “McKinsey never reviewed nor provided advice on any investment the CIB completed.” More specifically, he claimed he was not aware of any work for the Government of Quebec or the Government of Alberta on files that could have enabled those governments to seek funding from the CIB. He also stated that “McKinsey has not been involved in any investments that the CIB has seen or with any potential proponents bringing investments to the CIB since its inception.” Finally, when asked about McKinsey clients receiving investments from the CIB, Mr. Palter responded that McKinsey provides a wide range of services to a variety of clients, including strategy and organisation, and digital transformation, stating that McKinsey has “done no work supporting any proponents from Canada approaching the CIB on any of their potential infrastructure projects.”

Michael Sabia

When he was President and CEO of the Caisse de dépôt et placement du Québec (CDPQ), Mr. Sabia recalled being asked by then-Minister of Finance Bill Morneau to take over as chair of the CIB, in the hope of accelerating its “quite slow” pace during its first three years. He added that Mr. Morneau had “asked whether in working with the management of the bank and outside advisers we could accelerate the activity of the bank and, what was called at the time, the growth plan for the bank.” When asked whether he directed Mr. Sabia to hire outside consultants, Mr. Morneau replied that he was not involved in “the management or the direction of the Canada Infrastructure Bank. That would be separate from the role of minister of finance.”

Mr. Morneau had no specific recollection but believes that he would have spoken directly to Mr. Sabia about taking over as chair. He indicated that the CIB was viewed as a joint responsibility of both the ministries of infrastructure and finance, and that he would have been best suited to have a discussion with Mr. Sabia, given their connection through the Advisory Council. When asked why he was personally involved in the hiring process, Mr. Morneau replied that this would have been appropriate for leadership positions, as “there's also an element of trying to convince people that they should be part of this.”

Mr. Sabia was chair of CIB’s board of directors from April 2020 to December 2020.

CDPQ

From 2008 until February 2020, Mr. Sabia was the president and CEO of the Caisse de dépôt et placement du Québec (CDPQ), a global investment fund whose initial purpose was to manage the funds of the Québec Pension Plan.^[28] As previously mentioned, he was in this position at the CDPQ while serving in a volunteer capacity with the Advisory Council.

Mr. Sabia acknowledged that the very first investment made by the CIB was a $1.28 billion investment in the Réseau express métropolitain (REM), which was itself run by the CDPQ. He maintained, however, that the CIB’s investment decision was “completely unconnected” to his work on the Advisory Council. He also denied the appearance of a conflict of interest.

He also stated that “the Government of Canada decided that an appropriate vehicle for that investment would be the Canada Infrastructure Bank.” When asked whether he, as minister of Finance, was involved in the REM investment decision, Mr. Morneau replied “No”. Several witnesses repeated that the CIB was designed to operate independently and at arm’s length from the Government of Canada.^[29]

Mr. Sabia acknowledged that the CDPQ had contracts with McKinsey while he was CEO.

Meeting with Dominic Barton on 23 June 2020

Mr. Sabia and Mr. Barton both confirmed that they participated in a meeting by telephone on 23 June 2020, at which time Mr. Barton was serving as Canada’s ambassador to China. Mr. Barton indicated that Mr. Sabia had requested the call and confirmed that he was not compensated for it.

Mr. Barton described the call as “a conversation with Michael Sabia and Mark Wiseman about him (Mr. Sabia) taking on the new role as chair.” Mr. Sabia viewed it as Mr. Barton “essentially doing us the favour of providing some of his thoughts as we worked on how we could accelerate the performance of the Canada Infrastructure Bank.”

When asked whether the CIB had the internal capacity to provide advice on this issue, Mr. Sabia replied:

in the making of policy or in the making of decisions in large corporations or small corporations, you always reach outside. You always want to talk to other people. You always want to gather the greatest number of ideas and perspectives that you can, because the world is a complex place. You always want new ideas, different thinking and different perspectives, because that's how you make good decisions.

When asked about the involvement of McKinsey staff in scheduling and conducting the call, Mr. Barton told the Committee that he did not consider the call to be a McKinsey seminar, but simply a conversation at the request of Michael Sabia. He also indicated that he was not aware of the presence of McKinsey staff on the line.

Mr. Sabia denied “even the potential for a conflict” in this conversation. Mr. Barton confirmed that he did not feel the need to report the call to the ethics commissioner, as it was held at the request of Mr. Sabia.

Mr. Sabia also confirmed having participated in a McKinsey summit, the global infrastructure initiative, while he was chair of the CIB’s board of directors. He said this type of conference is “about getting out, getting ideas and contributing ideas. For Canada, it's about Canada being part of these global conversations on big issues, which is always to the benefit of the country.”

Former McKinsey Employees

Mr. Cory confirmed that four CIB employees had previously worked at McKinsey: himself, his executive assistant Lisa Burkitt, Steve Robins, and Aneil Jaswal.

In his testimony before the OGGO Committee, Mr. Cory confirmed that “not since any former McKinsey employees have worked at the CIB has McKinsey been hired to do a dollar's worth of work.” Mr. Pickersgill confirmed this, telling the Committee that McKinsey’s “work with the CIB ended in 2020, before Ehren Cory became the CEO. We have not done any work with the CIB since 2020, and we have done no work with former McKinsey colleagues who have worked at the CIB.”

Mr. Cory told the OGGO Committee that, after working for McKinsey, he worked in the public service, including for Infrastructure Ontario. He was contacted by an executive search firm and hired in his current role as CEO of the CIB through a competitive process.

Mr. Robins recalled first working with Mr. Cory at McKinsey in 2011, and subsequently at Infrastructure Ontario in 2013 and 2014. He indicated that Mr. Cory discussed his joining the CIB as head of strategy in late 2020. Mr. Cory confirmed being involved in hiring Mr. Robins.

Mr. Robins and Mr. Cory confirmed that Mr. Jaswal was hired through an open and competitive process, led by Mr. Robins, to whose department Mr. Jaswal is assigned. Mr. Jaswal confirmed that he worked at McKinsey from August 2016 to February 2018, after which he joined the public service. He applied to a position with the CIB through a posting on LinkedIn.