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Gagliano's testimony

(PoliticsWatch posted March 18, 2004) 
Standing Committee on Public Accounts
Comité permanent des comptes publics
TRANSCRIPTION FROM 9 :05 a.m. TO 10:30 a.m.




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

This morning, as a witness, we have as an individual, the hon. Alfonso Gagliano. Just so that everyone knows, the orders today will be that there will be a recess from 11 a.m. to 11:30 a.m. and lunch from 1 p.m. to 2:30 p.m. and the meeting will restart at 2:30 p.m.

At the beginning of the third session, that would be at 2:30 in the afternoon, I expect that we will have the Auditor General of Canada come forward. She is in the room observing the hearing this morning but we didn't want to get into a one person versus another person and therefore Mr. Gagliano will have the floor for the morning but in the third session we will start off with questions to the Auditor General. So, if you have anything specific, know that she will be coming forward later in the day.

Ms. Wasylycia-Leis, you gave me a note, an indication that you wanted to speak.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Mr. Chair. I would like to make a suggestion, I believe a friendly suggestion that would be seen as a constructive proposal to address the significance of today's hearings with one of the key witnesses in terms of the whole sponsorship scandal.
As you know, Mr. Chair, we have a method of operation at this committee where we each have eight minutes in the first round and then we revert to four minute rounds.

Given the significance of today's discussion and the need for a fulsome debate, and the difficulty one has of actually developing a line of questioning in four minutes, I would make a suggestion that we have eight-minute rounds for all day today and revert to the normal way of operating when we meet tomorrow, if we meet with Mr. Gagliano tomorrow.

The Chair: There is a suggestion by Ms. Wasylycia-Leis that all interventions be eight minutes in length. Is that agreed?

Some hon. members: Agreed.

The Chair: Okay, that's agreed.

I have a standard statement that I always give at the beginning of these meetings. It is a reminder to witnesses. It is not to any particular witness. It is to all witnesses who appear before the committee.

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

Since we have a former cabinet minister before us this morning, Mr. Gagliano, do you feel in any way constrained by your oath of office as a cabinet minister and member of the Privy Council or are you able to give us full answers this morning?

L'hon. Alfonso Gagliano: I will be at your disposal and to the best of my knowledge I will give all the answers. Naturally, if cabinet material is not public I am bound by my oath of office and therefore I cannot address those issues that are not public.

The Chair: You are aware that the Prime Minister has given us cabinet documents. Mr. Walsh, our law clerk, sits here. I will not speak for him, so I will ask him to speak about the responsibility of government to Parliament. 

Do you want to say something, Mr. Walsh?

Mr. Rob Walsh (Procedural Clerk): Just briefly, for the benefit perhaps of Mr. Gagliano and his counsel, we do have provided to the committee what are represented as old cabinet documents that are relevant to the sponsorship matter which is the subject of the enquiry of this committee. Accordingly, the committee, I believe, would expect that, Mr. Gagliano, you would be able to answer all questions relating to the sponsorship matter. I think the purpose of the Chair's enquiry is to know whether, notwithstanding the delivery of all these documents to the committee, you would nonetheless feel constrained by your oath of office as a cabinet minister and might, on occasion in the course of the questions put to you by the committee, feel unable to answer a question by reason of your oath. 
I would just add to that, Mr. Gagliano, if I could ask you to clarify if it is the case that you anticipate that you might be constrained, would you undertake to indicate to the committee when it is, in the course of an answer, that you do so feel constrained?
¿ (0910) 

Hon. Alfonso Gagliano: Thank you, Mr. Chair.

I will be able and willing to answer all questions pertaining to cabinet documents that have been made public. If they have been tabled with this committee and they are public, yes, I will answer the question, but if the documents are not public yet, you understand that because of my oath of office I cannot discuss any of those matters.

The Chair: Mr. Walsh said that if you are constrained--

Hon. Alfonso Gagliano: I will mention that.

The Chair: --you will make the point that there is additional information that you have not put on the table by virtue of your oath.

Hon. Alfonso Gagliano: Okay.

Mr. Walsh.

Mr. Rob Walsh: Mr. Chairman, so that this is abundantly clear, my comment related to your oath of office as it may pertain to matters you would have discussed in cabinet, at a committee of cabinet or might have discussed with other ministers pertaining to a subject matter discussed at cabinet or discussed at a committee of cabinet and may or may not go beyond what is reflected in the documents provided to this committee. Accordingly, the purpose of my comment is to enquire as to whether you would feel constrained from answering questions fully and truthfully, notwithstanding the fact that your answer would go beyond what is evident in the documents provided to the committee.

Hon. Alfonso Gagliano: Would you repeat what you just said? 

What I said was I was able and willing to answer questions concerning the cabinet documents that have been made public. Now I think you are going beyond that. You're going to discussions with ministers and so on, and the oath of office, as you know, includes all things. Definitely, there is a line, but could you please repeat your question so we make sure that we understand fully what you are trying to say?

The Chair: Rob.

Mr. Rob Walsh: Certainly, Mr. Chairman, the ambit of the enquiry by the committee is what as referred to as the sponsorship program and the sponsorship so-called scandal. You have responded to the Chairman's earlier statements on limiting your availability to those matters found in the documents provided to this committee. I just wanted to seek your clarification that you are not necessarily limiting yourself to what may be found in those documents and that you are prepared to answer all questions relating to the sponsorship scandal, including providing answers which may or may not be reflected in the documents provided to the committee.

Hon. Alfonso Gagliano: Again, this is a very grey line that we're dealing with that, for the first time, we have a number of cabinet documents that were made public and I'm ready to speak about those documents that are public, but I think beyond that, at this time I will reserve my right according to my oath of office, and I'll mention whenever a question goes beyond the documents. I didn't expect and I didn't have time to consult the Clerk of the Privy Council on this matter. 

The Chair: Mr. Toews.

Mr. Vic Toews (Provencher, CPC): On that point, Mr. Chair, I don't want to belabour this point, but, as I understand it, Mr. Gagliano's oath binds him, but if he has been relieved of that obligation by cabinet and the Prime Minister, then whether or not that oath was undertaken that no longer binds him and he is entitled to provide information that relates beyond the documents but may in fact relate to other cabinet confidences. That needs to be clear on the record because I don't think that's what I'm hearing from this witness.

The Chair: 
Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: Just two points, to follow up Mr. Walsh's comments. First of all, I think we do need some clarification on the oath that Mr. Gagliano says he has taken and what that means in terms of our hearings, deliberations, today. Is it in fact the case, as Mr. Toews has just said, that Mr. Gagliano may not be bound any longer by that oath of office or that he's been released from the terms of that oath? Secondly, I think that Mr. Walsh is saying that notwithstanding your interpretation of your oath of office, if we have knowledge of other developments pertaining to the sponsorship scandal that are not referenced in the auditor general's reports, that you are at liberty within the terms of your oath to discuss those issues and questions that we raise accordingly.
¿ (0915) 

The Chair: Okay.

What I'm going to say is that....

Madam Jennings, you want to speak on this issue.

Mrs. Marlene Jennings (Notre-Dame-de-Grâce-Lachine, Lib.) (Notre-Dame-de-Grâce-Lachine, Lib.): Yes, thank you.
In my view it's perfectly clear that any information that's contained in the cabinet documents that have been released to this committee and made public can be testified to by anybody who would have had knowledge of the information contained in it. It's also clear to me that given the oath of office that ministers are required to swear to in order to take up their post that if that Mr. Gagliano or any other present minister or past minister is asked a question that the information of which is not contained in the public cabinet documents that individual is sworn to their oath and, as Mr. Gagliano pointed out to Me Walsh, would say I do have other information, but my oath of office does not allow me to divulge it. In which case, we can, if we wish, make a motion to the Prime Minister and the privy clerk to have the individual released of their oath of office on that particular matter and then we can determine it. It may be pertinent, it may not be pertinent. So I think that that's the best procedure. 

I'm not sure if Mr. Gagliano has had a chance to look at all of the cabinet documents in detail that have in fact been made public. I know, notwithstanding the fact that I have them in my possession, I haven't been able to look at all of those documents. I mean, we've been literally, you know, drowned under documents. So it would not surprise me that there may be information contained that Mr. Gagliano doesn't recall because he hasn't had a chance to look at them.

The Chair: 
Okay. Mr. Walsh, when he spoke to the committee some weeks ago indicated to us--I'm sorry, but can we stop the cross-conversations please, Mr. Desrochers, Madam Jennings, please--Mr. Walsh indicated to this committee, or said to this committee some weeks ago that under our system of responsible government that Parliament can ask any question that it wants and is entitled to the answers.
Based on that, of course, this committee passed a motion requesting cabinet documents which we have received. The Prime Minister has said that he wants everything on the table and nothing to hide and whatever the other quotations were. There have been some references to some documents. In fact, we know from the cabinet documents that were given to us that decisions were based on verbal conversations rather than written documentation and therefore these discussions that were not written, to me, formed part of the release. 

However, last week, Madam Jennings put forth a motion that we ask the Prime Minister and the Privy Council Office to clarify and to authorize the ministers and former ministers who had taken the Privy Council oath of office to be relieved from that oath insofar as the sponsorship program is concerned. Of course this is not a blanket waiver but as far as the sponsorship program is concerned.
In that regard the clerks have sent a letter to the Privy Council Office which I do not have with me but I may have later on this morning, requesting a response from the Prime Minister.

At this point in time, my decision is that Mr. Gagliano, you have to answer the questions of this committee. If you feel the contrary and you are withholding information because of your oath, then please indicate when you say so that there is additional information that you are aware of, however you have withheld it by virtue of the fact that you feel you are constrained by your oath.

So, we'll move on. I want to give the fourth report of the Subcommittee on Agenda and Procedure of the Standing Committee on Public Accounts, which met on Thursday, March 11, 2004, and agreed to make the following recommendations: that, if required, the committee sit on Tuesdays and Thursdays from 9 a.m. to 1 p.m. and on Wednesday from 3:30 p.m. to 5:30 p.m.; that the committee hold one meeting to consider both the public accounts of Canada for 2002-2003, and vote 20 under finance of the main estimates of 2004; that the auditor general of Canada be invited to appear before the committee for 15 minutes on Thursday, April 1, 2004, in order to present an overview of her March 2004 report; that Mr. Charles Guité be invited to appear before the committee on Thursday, March 25, 2004, at 9 a.m.

Madam Jennings.
¿ (0920) 

Mrs. Marlene Jennings: Yes. This report insofar as it concerns the motion that I made as to the sitting hours of the committee does not reflect accurately my motion. It was not that "if required". It was that during the work of the Public Accounts Committee pursuant to Standing Orders 108, Chapters A, B, C, D...of the auditor general's report, that the committee sit on Tuesdays and Thursdays from 9 a.m. to 1 p.m. and on Wednesdays from 3:30 to 5:30 p.m.

It makes a difference.

The Chair: The clerk advised me that's the bureaucratese caveat, and insofar as if we wanted to have a steering committee, a witness committee, rather than a full Public Accounts Committee, then we could use that time for other issues, therefore we have put in that caveat of "if required". 

So that's the explanation for it. We all agree that four hours on Tuesday, four hours on Thursday, two hours on Wednesday is the intent. Okay.

Mrs. Marlene Jennings: I'm not really satisfied.

The Chair: Okay, then if you want to remove the words "as required", that will be fine.

Mrs. Marlene Jennings: Yes. I would like to remove that.

The Chair: Okay. So, deleting the words "if required", let the committee sit on these times. So that is the fourth report of the subcommittee. Is that adopted? All agreed?

Oh, yes, we're sitting during a break week. We cannot adopt it so that will be on the agenda for the next one.

Okay, I have a motion, a letter from Ms. Wasylycia-Leis, which says: "May I address the meeting, Mr. Williams. I would like to submit the following motion for consideration by the Standing Committee on Public Accounts at its next meeting". 
So this is notice of motion--again, we can't pass this because of the break week--the motion being that the committee request that a copy of the daily agendas for all ministers of the Crown between November, 1993 and December, 2003 be forwarded to committee's counsel for his review and the committee's counsel forward to members of the committee those portions that are relevant to the committee's study of chapters three, four and five of the auditor general's 

November, 2003 report, sincerely, Ms. Judy Wasylycia-Leis, M.P.
We may just want to constrain that since it's all ministers. I'm not sure we want all ministers. Do you want all ministers?

Ms. Judy Wasylycia-Leis: Well, at this point I would say we're not sure how to narrow that down, so we might want to say "all ministers".

The Chair: She says "all ministers", so there it is. That's a notice of motion, and it will come up next week for discussion.

I think we're ready to hear Mr. Gagliano. He is accompanied this morning by Mr. Pierre Fournier, who we understand is his counsel, and we welcome you both to the table. First of all, I'd like to welcome you back to the House, Mr. Gagliano. 
You're a former, long-time member of this House, so welcome back.

Hon. Alfonso Gagliano: Thank you.

The Chair: According to the rules, of course, you may consult your counsel, but counsel cannot speak to the committee; he can only advise you. All questions will be directed to you, and of course if you wish to consult your counsel, do so, but he cannot speak.

So turning to you, I understand you have an opening statement, Mr. Gagliano. The floor is yours.

L'hon. Alfonso Gagliano: Merci, monsieur le président. C'est non seulement volontairement mais avec plaisir que je me présente devant votre comité. Puisque mon nom a été faussement associé au scandale des commandites à plusieurs égards, j'ai enfin la chance de rétablir publiquement les faits me concernant, et je désire remercier le comité de m'accorder cette opportunité. 
Avant de passer en revue les faits, il y a plusieurs questions d'ordre général qui, je crois, méritent une réponse afin de vous aider à mieux comprendre ma position. Après l'étude des faits, je conclurai en vous demandant d'en venir à la seule et unique conclusion possible de ce que vous et moi connaissons dans cette affaire.
The first part of this general point has to do with the nature of responsibility. Forgive me if I take a very personal approach to this question. I feel I am the one who has paid the greatest price for this scandal so far. I have paid the price politically; it is now evident that I could not get myself elected anywhere in Canada at this time. I have paid the price financially as I have now been dismissed from my position of ambassador to Denmark, despite earning the best evaluation possible in that function. But most of all I have paid the price in terms of my honour and my dignity. These are fundamental rights, in which I have been truly violated by too large a number of persons to start naming them now.
What, if anything, am I supposed to be responsible for and in what context? 
¿ (0925) 
Il y a 20 ans, j'ai accepté de relever le défi de servir mes concitoyens en les représentant à la Chambre des communes tel que chacun de vous l'avez fait. Je l'ai fait car plusieurs sentiments m'animaient; le sentiment que je devais à mon pays tout mon dévouement et la compétence dont je me sais capable; le sentiment qu'il n'y a pas de plus grand honneur que d'être élu par ses compatriotes; le sentiment que j'avais, c'est que c'est ce que cela prenait pour bien faire ce travail. Vous avez sûrement éprouvé ces mêmes sentiments.
Lorsqu'en 1994, le premier ministre m'a demandé de me joindre au Cabinet à titre de secrétaire d'État, Affaires parlementaires, non seulement j'ai senti le devoir d'accepter, mais c'est également avec empressement que j'avais envie d'accepter et donner tout ce dont j'étais capable à quel que ministère qui me serait confié. Je me suis montré à la hauteur de la tâche. En retour j'apprends maintenant que je devrais être responsable d'une fiasco pour lequel je ne suis pour rien. C'est rendu à un tel point que les mêmes personnes qui ont jadis voté pour mois, croient maintenant que je dois être responsable parce tout le monde dit que je le suis. Personne n'a cependant demandé ce que le terme "responsable" impliquait vraiment.

To be responsible, Mr. Chairman, is to have to answer to someone for one's actions. If someone commits a crime, he must answer to the criminal justice system. If someone defaults on his contractual obligation, he must answer to his creditor, and if he fails to do so, to the civil justice system, to whom those are a politician, a member of Parliament, a cabinet minister.

The answer is many fold. As a member of Parliament, you answer to your voters. You do so by standing for re-election and being voted in or out depending on how they perceive your performance as their representative, how they think your party performed, etc.

I'm not standing for re-election, and will not in the forthcoming election. In our Canadian political system, unless you are the recognized candidate for one of the main political parties, your chances of being elected are nil. I would not be a candidate for any other political party other than the Liberal Party of Canada, and it is clear that I cannot be their candidate at this time.

In effect, whether I did anything wrong or not, I have already been held responsible politically as a member of Parliament. This may seem unjust--and it probably is--but it's the system we have all accepted to live in, and I will not denigrate it. It served me well in the past, and I have no regrets that it doesn't serve me well at all now. That's life.

As a minister, your responsibility itself is twofold. First you answer to the man who appointed you in the first place, the Prime Minister. Second, you answer as a group before the House of Commons. This is known as a "ministerial responsibility".

In the first case, you all know that the Prime Minister has dealt with me in a manner that says that he did not think that I had done anything wrong. For that reason he had appointed me the Canadian ambassador to Denmark.

As to my collective ministerial responsibility, you are all witness to the fact that the House of Commons did not then, and has not now, lost confidence in the cabinet--nor should it--for the reason I will explain shortly.

Let's review the facts. Most of these facts are far better known to you than they are to the public, so you'll not be surprised to hear them. What I find amazing is that I am now compelled to remind you of them.

These facts can be grouped in three different categories: what I did generally while I was a minister, particularly of Public Works and Government Services; what has been found about me in relation to the sponsorship scandal; and what I did specifically in relation to that issue.

First of all, and please bear with me as I explain to you what a minister does in our system and what he does not do, a minister does not run his department. He has neither the time nor the freedom to do so. When appointed to head a department, a minister is instructed to consider his deputy minister as principle advisor in exercising his new functions. 

The new minister does not appoint his principle advisor nor can he fire him. His principle advisor is chosen by the Office of the Privy Council. He serves in that capacity at the office's pleasure, and not the minister's.

I have to add that even without this instruction, that wouldn't necessarily be the case anyway. The little constraints on the minister in dealing with bureaucracy prevents him from exercising any real direct control on the person affected in his department. In any case, the correlated jobs that go with his appointment simply do not give the time or the opportunity to exercise any such direct control.

In my particular case, in addition to my principle responsibility as Minister of Public Works and Government Services, I was also the deputy leader of the government and of the House of Commons, the minister responsible for Canada Post Corporation, of Canada Mortgage and Housing Corporation, of the Royal Canadian Mint, of the Canada Land Company, of the Old Port of Montreal, of the Defence Construction Corporation, of the Queen's Gate Corporation, of the Canada Information Office, and regional minister for Quebec.

I sat on or presided over many committees including the Economic Union cabinet committee, the Social Union cabinet committee, and the cabinet committee of Government Communications. I was a member of the Treasury Board and the cabinet's special consul.

For all of these functions, I was by more than 90,000 employees, and I supervised a budget in excess of $4 billion.
¿ (0930) 
During the week I worked from 7 a.m. to 7 p.m. mostly going from meeting to meeting. At many of these meetings my principal function was to ensure the proper coordination between my department and both of the other ministers on those committees. For this purpose I acted as a spokesman for my department and unless I had some serious reason to disagree with him, I accepted my deputy minister's recommendation as the position I should take. Just like you I spend my weekends in my riding. Being a cabinet minister is not for the weak body, it is a very strenuous job and I gave it all I had.

There were times of course when I had to intervene more directly in the workings of the department. The strategy that I followed was fully in accordance with tradition. When you find something is not working as it should, you order a study and you put in place the recommendations that follow the study. This is the time-tested method of dealing with delicate issues because it ensures that you will not run afoul of any applicable legislation.
Je peux résumer mes activités reliées au Programme des commandites ainsi. Lorsqu'il y avait des problèmes, j'essayais de les régler. Lorsque je n'étais pas avisé, j'étais impuissant, ceci en parfaite conformité avec les directives émises à l'attention des ministres et à l'attention des sous-ministres. Plus particulièrement, dans le cadre du Programme des commandites, j'ai posé les gestes suivants: J'ai hérité du Programme des communications. Le ministre des Travaux publics s'est vu conféré cette responsabilité le 23 juin 1994 par la décision du Conseil du Trésor. Le Programme a fait l'objet d'au moins deux révisions par le Conseil du Trésor. Le Programme des commandites a été approuvé pour la première fois en novembre 1996, pour les années 1996-1998, et par une autre décision du Conseil du Trésor qui incluait une liste des projets des commandites qui reflétait considérablement ce que la vérificatrice générale a trouvé inadéquat dans son dernier rapport.

À mon arrivée à la tête du ministère des Travaux publics et Services gouvernementaux, en 1997, j'ai révisé et suivi les recommandations du Secrétariat du Conseil du Trésor. Celles-ci comprenaient la réorientation du processus d'achat au sein du ministère. J'ai témoigné de l'organisation du Service de coordination des communications. Cette organisation était rendue nécessaire par la privatisation du Groupe Communications Canada, laissant un nombre de programmes orphelins dans divers ministères. C'était une politique du gouvernement que les communications soient réunies sous une seule et même autorité.

En août 1998, j'ai signé une soumission au Conseil du Trésor afin de créer le poste de sous-ministre adjoint, gouvernement du Canada, Service de coordination des communications, afin de m'assister dans ma capacité de président du Comité du cabinet chargé des communications. Cette soumission a été approuvée en ce temps.

J'ai commenté la vérification de la gestion des commandites à la direction générale des Services de coordination des communications, qui a donné lieu au rapport du 30 août 2000 dans laquelle la principale considération se lit comme suit: " Le processus de sélection retenu par les fonctionnaires de la direction générale des Services de coordination des communications en poste à l'époque pour choisir la firme des communications et l'agence de distribution, ne respecte pas l'esprit ni la lettre de règle et directives établies par le Conseil du Trésor ".
Suite à ce rapport, j'ai demandé au vérificateur si je devais appeler la police, mais je me suis fait dire que le problème était de nature administrative et non criminelle. J'ai immédiatement ordonné l'arrêt du Programme des commandites jusqu'à ce qu'un nouveau plan d'action des gestionnaires soit conçu et mis en place. Le nouveau plan d'action des gestionnaires a été mis en place à la fin de l'an 2000 ou au début de 2001. Des nouvelles firmes de communications ont été choisies suivant une nouvelle compétition et le programme a été recommencé, le tout selon les normes du Conseil du Trésor.

En 2001, le conseiller en éthique à qui j'avais demandé de réviser le contenu de quelques contrats de publicité qui avaient été donnés à Groupaction et à Groupe Everest a émis un rapport dans lequel il a conclu que je n'avais pas participé à l'octroi desdits contrats mais que j'avais simplement approuvé les recommandations du Comité de sélection afin de se conformer aux exigences liées au pouvoir de signature.

Durant la même année, j'ai combiné le Bureau d'information du Canada et la Direction générale des Services de coordination des communications. J'ai fait cela parce que je voulais séparer les personnes en charge des programmes de celles qui octroyaient les contrats. Effectivement, ceci était une tentative de remettre les choses telles qu'elles étaient avant 1994.

En mars 2000, après que j'ai été nommé ambassadeur au Danemark, le rapport de vérification interne de Communications Canada portait la mention suivante: " Aucune recommandation ne découle de cet examen de suivi des dossiers des commandites ". Cette vérification interne concernant les Programmes des commandites pour la période de juin à septembre 2001 était requise selon le plan d'action des gestionnaires que j'avais mis en place et a été entreprise à ma demande.

¿ (0935) 
The remarkable fact is that most of this is already in the auditor general's report and that she has not found me wanting in any respect or relation to my performance as Minister of Public Works. She stated in her testimony on February 19, before this committee, and I quote, "We wouldn't be here today if the internal audit hadn't done that initial audit in 2000". 
That initial audit was the very audit that I had ordered and remember, that she also stated in Halifax in early March, and I quote "There has been a lot of allegations about Mr. Gagliano without any facts. It is important that we follow due process with someone not being tarnished unfairly in all this".
In conclusion, Mr. Chairman, I will not ask you or any of the members of this committee to treat me with any particular sympathy. I will not ask you to have regard for the fact that I have honestly believed that I did everything in my power to fulfill the obligation of the cabinet position that I held. I do not seek favours here. I seek justice.
If it is your serious wish to avoid similar situations in the future, if you are concerned with doing what is in the best interest of our country, then I suggest that you consider ways in which you can give those with the ministerial responsibilities better tools to enable them to do their jobs.
I'm out of government so I do not think I should be the one making those recommendations here, but let me suggest to you some general criteria that should be followed.
We should not do away with collective ministerial responsibility but within this broad responsibility, ministers should be specifically responsible for all that goes on within their department. To ensure that they are able to fulfill their requirements, ministers should have the power to appoint and dismiss high level executives of their departments and to follow their recommendations in appointing or dismissing lower levels employees in their department. You have to consider ways in which the co-ordination between departments can be assured without requiring the physical presence of the minister at every committee to sign to ensure this co-ordination.
I realize how many laws and guidelines would have to be amended for this purpose. Also realize that many of you may balk at giving individual ministers so much power, but you can't have the cake and eat it too. You cannot say to the minister that is personally responsible for everything that goes on in his department and yet deprive him of the tools that any other responsible person would insist upon having.
My experience as a minister tells me that no matter how much I tried I never had the control or power over my department that would have given me the ability to answer for all that went on with them. That was most certainly the case with the sponsorship program.
I did not derive any benefit from this program. It was in my personal best interest that they were run correctly and that is why I insist on putting in place the reforms that were necessary to ensure that all Canadians be well served by the sponsorship program.
Justice in my humble opinion is entirely in conformity with the 1989 guidelines of your committee, Mr. Chairman, and I quote, 
"Because of the amount of delegation that is required today it is not fair to the ministers to them to be personally responsible for the actions and decisions of all employees in the department. As well it is impossible for a minister to have knowledge of all actions and decisions taken by departmental officials".
Thank you, Mr. Chairman, and I welcome all questions from you and the committee members.
¿ (0940) 
The Chair: Thank you very much, Mr. Gagliano.
I mentioned to the committee earlier that I anticipated receiving some letters, and I want to read them into the record before we get into the questioning. This regards the motions that we had passed at an earlier date.
One is dated Tuesday, March 16, to the Right Honourable Paul Martin, Prime Minister of Canada.
Dear Prime Minister:

During its meeting on March 11, 2004, the Standing Committee on Public Accounts adopted a motion requesting that all departments and Crown corporations be informed to produce in their entirety all documents the committee requests, notwithstanding the Privacy Act and the Personal Information Protection and Electronic Documents Act, and that should any part or parts of these documents be subject to the said legislations, the department or Crown corporation should so inform the committee in a separate and covering document. An extract of the minutes of proceedings is attached. 

The committee would very much appreciate your cooperation, as well as that of the Clerk of the Privy Council, informing all departments of this request.

Yours sincerely, Elizabeth Kingston, co-clerk of the committee.

With a copy to Alex Himelfarb, the Clerk of the Privy Council.
The second letter is to Mr. Himelfarb, the Clerk of the Privy Council and Secretary of the Cabinet:
Dear Mr. Himelfarb:

During this meeting of March 11, 2004, the Standing Committee on Public Accounts adopted a motion ordering that the Privy Council Office provide a copy of the minutes and all records from all meetings of any cabinet committee, including ad hoc committees, including all documents created and generated by the committee itself, wherein communications and sponsorship activities/programs were discussed between January 1, 1994 and February 10, 2004. An extract of the minutes of proceedings is attached.

Please note that the committee expects these documents be provided in both official languages. Should compliance with this requirement create a significant delay, please contact me at my telephone number. Your assistance in complying with the order of the committee in a timely fashion is appreciated.

Yours sincerely, Elizabeth Kingston, co-clerk of the committee.
Also, a letter to Mr. I. David Marshall, Deputy Minister, Deputy Receiver General for Canada:
Dear Mr. Marshall:

During its meeting on March 11, 2004, the Standing Committee on Public Accounts adopted a motion requesting that the Department of Public Works and Government Services Canada write to all parties in receipt of a sponsorship grant from the time of the program's inception, asking that they provide a description of the event, when they first learned of the sponsorship program, how they applied for the grant, the amount approved for each year, as well as the amount of overall moneys received. The committee has requested that a summary of this information be presented to the committee by constituency. An extract of the minutes of proceedings is attached. 

Please note the committee expects the documents be provided in both official languages. Should complying with this requirement create a significant delay, please contact me at my telephone number. Your assistance in providing the committee with this information in a timely fashion is appreciated.

Yours sincerely, Elizabeth Kingston, co-clerk of the committee.
Finally, another letter to the Right Honourable Paul Martin, Prime Minister of Canada:
Dear Prime Minister:

During its meeting on March 11, 2004, the Standing Committee on Public Accounts adopted a motion requesting your authorization that all members of the Privy Council and public office-holders called to testify before the committee be released from their oath of secrecy and confidentiality in matters related directly to: Chapter 3, the sponsorship program; chapter 4, advertising activities; and chapter 5, management of the public opinion research of the November 2003 Report of the Auditor General of Canada. An extract of the minutes of proceedings is attached. 

The committee would very much appreciate your cooperation in releasing Privy Councillors from the oath under these special circumstances, and of providing a prompt written response to this request.

Yours sincerely, Elizabeth Kingston, co-clerk of the committee.
So we are awaiting a response from the Prime Minister on these issues.
A couple of questions, Mr. Gagliano, before we move into questions from the committee members.
On your last point, you refer to the 1989 guidelines of this committee. I'm not aware that we have any guidelines, other than those of the House of Commons. Perhaps you could tell us where these guidelines come from.
¿ (0945) 

Hon. Alfonso Gagliano: Mr. Chairman, we took it from, it's a document, I believe, from the Internet. It's 2003 report to the auditor general, number two, which says, paragraph 2.40, public accounts committee guidelines.

Developed in 1989 by the Canadian Council Public Accounts Committee. Guidelines by the public accounts committee in Canada provide a contribution to this discussion of the responsibility.

That's where we find the quote that I used and this is page 7 of 17 in that report.

The Chair: Thank you very much. My second question. You're appearing before us an individual this morning. Did you discuss or have meetings with any members of the government in preparation of your report before coming here this morning?

Hon. Alfonso Gagliano: No, sir.

The Chair: You didn't, okay.

Hon. Alfonso Gagliano: I only called the clerk of the privy council concerning my Ottawa office...should I address questions where that document was not followed. That's the only I didn't speak to any current members of parliament or cabinet ministers. 

The Chair: Okay, or bureaucrats? Anybody in the bureaucracy?

L'hon. Alfonso Gagliano: No.

The Chair: Okay. Ms. Ablonczy, I believe you are the first person with questions. Eight minutes, please.

Mrs. Diane Ablonczy (Calgary-Nose Hill): Thank you, Mr. Chairman. Mr. Gagliano, I take it from your response to the chairman that you are aware that the committee has been mandated to conduct a study with respect to the auditor general's 2003 report that was referred to the committee in February of this year. You are aware of that, sir?

L'hon. Alfonso Gagliano: Yes, I'm aware.

Mrs. Diane Ablonczy: I take it that you, therefore, have read the auditor general's report...

L'hon. Alfonso Gagliano: Three times.

Mrs. Diane Ablonczy: And you understand the nature of the report, sir?
¿ (0950) 

L'hon. Alfonso Gagliano: Yes.

Mrs. Diane Ablonczy: I would ask you, then, and refer you to the observations made in the auditor general's report, the findings of the report, where the auditor general found, with respect to the sponsorship programs, widespread failure to comply with contracting policies and regulations, page 21. 

Going on, selection of communications agencies broke the rules; selection of communications agencies broke the rules; selection of the agency of record contravened contracting rules; contracts awarded for specific events without following contracting policies; lack of due diligence in selecting and approving events prior to sponsor; no analysis of sponsorship amount for each event; little evidence of the value received by the Crown for the money spent; work sub-contracted without competition; contracts amended without documented support; lack of compliance with relevant financial authorities; oversight and essential controls were bypassed; the role of parliament was not respected. 

Mr. Gagliano, do you accept these findings of the auditor general with respect to the sponsorship program?

Hon. Alfonso Gagliano: At around, I believe, February or beginning of March, after we learned the problem with the human resource department with their problems, I discussed with my deputy minister the possibility to have an internal audit of the sponsorship program--

Mrs. Diane Ablonczy: With respect, Mr. Chairman, that was not my question. I have re-read for the witness, the findings of the auditor general with respect to the sponsorship program--

Hon. Alfonso Gagliano: Mr. Chair...

Mrs. Diane Ablonczy: --and my question is very simple, yes or no, does the witness accept these findings of the auditor general with respect to the sponsorship program?

Hon. Alfonso Gagliano: Mrs. Picard, if the committee wants to know what happened, definitely it's not by a yes or no that we're going to find the truth.

Mrs. Diane Ablonczy: That's...

The Chair: The point being that the question from Ms. Diane Ablonczy asks for a yes or no.

Hon. Alfonso Gagliano: Yes, yes those findings that the Auditor General found mention in her report, she says in that same report those who were same finding of the internal audit of 2000. So what I'm trying to explain that ... 

The Chair: I know but ... 

Hon. Alfonso Gagliano: ... that in the year 2000 and we find those anomaly and we took correction of them.

The Chair: That was not the question by Miss Ablonczy. She said, did you agree with these statements?

Hon. Alfonso Gagliano: Yes that statement was found in the audit, internal audit of the year 2000.

The Chair: Do you agree with it?

Hon. Alfonso Gagliano: Well I agree, I mean with a general trust. I mean she listed a list. The general trust that there were administrative problem, that's what we found in the audit 2000. The Auditor General says that those same things were found in the Auditor General report. It's in this report here. I read it three times.

The Chair: Miss Ablonczy.

Mrs. Diane Ablonczy: Just to clarify, Mr. Chairman, Mr. Gagliano do you accept these findings by the Auditor General, yes or no?

Hon. Alfonso Gagliano: I accept the general trust of the finding of the Auditor General, yes I do. 

Mrs. Diane Ablonczy: Mr. Gagliano, the Auditor General on page 21 of her report, at 3.44 says the following "What is particularly disturbing about these sponsorship payments is that each involved a number of transactions with a number of companies sometimes using false invoices and contracts or no written contracts at all. These arrangements appeared designed to provide commissions to Communications' agencies while hiding the source of funds and the true nature of the transactions. The Parliamentary appropriation process was not respected. Senior public officials in the Communications branch and some officials of the crown corporations were knowing and willing participants in these arrangements."

Do you accept that finding of the Auditor General, sir?

Hon. Alfonso Gagliano: I was not aware of the findings of the Auditor General. So if you say that ...

Mrs. Diane Ablonczy: With respect that's not my question, sir. My question is, do you accept the findings of the Auditor General?
¿ (0955) 

Hon. Alfonso Gagliano: I'm not aware and all the facts are not known. So therefore I can not accept. I mean I acknowledge of reading those findings but I was not aware that such things were happening. 

Mrs. Diane Ablonczy: Well, sir, the Auditor General has a large department. She has in it a number of accountants, a number of auditors. She has a mandate to show due diligence in examining the matters before her, in this case, the sponsorship program and she made the finding that I've just read to you. My question is, do you accept that the Auditor General after exercising due diligence made this finding, do you accept that finding?

Hon. Alfonso Gagliano: I don't have to accept it. I have read the finding. I've read the report three times but I can not accept that whatever we don't know. There is this committee trying to find out what happened. There is also a public inquiry. There is 14 or more police investigations. So therefore yes I read the report. Yes I took notice of what says the report. But if your question is, do you take responsibility for what she's saying in the report, my answer is no.

Mrs. Diane Ablonczy: That's not my question, Mr. Gagliano. Let me put it another way, sir. Do you have any knowledge that would lead you to dispute the finding in the report that I have just referred you to?

Hon. Alfonso Gagliano: I'm not disputing the finding. But I can not say I accept them because I don't know all the facts. 

Mrs. Diane Ablonczy: Thank you, Mr. Gagliano. That's my question, thank you.

The Chair: Monsieur Desrochers, s'il vous plait, huit minutes. 

M. Odina Desrochers (Lotbinière-L'Érable, BQ): Merci, monsieur le président. 
Monsieur Gagliano, monsieur Fournier, bonjour. 

Monsieur Gagliano, moi, je sursaute en lisant votre déclaration d'ouverture à la page 6, lorsque vous dites que lorsque vous avez été nommé ministre, un sous-ministre qui avait été identifié par le Bureau du Conseil privé, et je sursaute aussi également lorsque vous dites, monsieur Gagliano, que vous étiez le ministre responsable de Travaux publics, ministre responsable du Programme des commandites et que vous avez dit depuis le début de toute cette histoire-là--d'ailleurs, vous avez fait une tournée médiatique assez vaste--, vous nous dites que vous ne savez rien, que vous n'étiez pas au courant. 

Par contre, à la page 6 de votre texte, toutes les sociétés d'État qui sont mentionnées dans le rapport de la vérificatrice générale, la Société canadienne des Postes, la Société canadienne d'hypothèques et de logement, le Vieux port, le Bureau d'information du Canada, ministre régional du Québec, tout cela relevait de vos responsabilités, monsieur Gagliano, et, par un pur hasard, ces sociétés d'État là sont impliquées dans le rapport de la vérificatrice générale. Vous allez essayer de me faire croire que vous n'étiez pas au courant que cela se passait? C'était des sociétés d'État qui dépendaient de vous et, d'un coup sec, vous nous dites ce matin que vous n'avez rien décidé parce que c'était le Bureau du Conseil privé. Mais vous aviez quand même, monsieur Gagliano, une force de frappe, puisque ces sociétés d'État là dépendaient de vous. Expliquez-moi cela, monsieur Gagliano.

L'hon. Alfonso Gagliano: Tout d'abord, monsieur Desrochers, vous devez noter que pas toutes ces sociétés-là, comme la Monnaie royale, la Queen's Skate Corporation...

M. Odina Desrochers: Cela relève de vous.

L'hon. Alfonso Gagliano: Oui, oui, mais elles ne sont pas dans .

M. Odina Desrochers: La majorité sont dans le Rapport de la vérificatrice générale.

L'hon. Alfonso Gagliano: ...la Société canadienne d'hypothèque et de logement, etc.

M. Odina Desrochers: Bon, cela relève de vous.

L'hon. Alfonso Gagliano: Oui, mais elles ne sont pas mentionnées dans le rapport, c'est-à-dire que la vérificatrice générale...

M. Odina Desrochers: La Société des postes n'est pas mentionnée?

L'hon. Alfonso Gagliano: Non, non, la Monnaie royale, monsieur Desrochers, ce n'est pas toutes les sociétés.

M. Odina Desrochers: Oui, oui, la Monnaie royale. Je n'ai pas parlé de la Monnaie royale, je vous parle de vous-même. Monsieur Gagliano, vous dites la Société canadienne des postes, la Société immobilière du Canada, la Société du Vieux-Port de Montréal, cela est identifié dans le Rapport de la vérificatrice générale, cela est sous votre responsabilité. Ce sont ces questions-là que je vous pose, n'essayez pas de fuir en disant que j'ai dit des choses que je n'ai pas dites. 

L'hon. Alfonso Gagliano: Non, non.

M. Odina Desrochers: Je veux savoir si vous saviez ce qui se passait.
L'hon. Alfonso Gagliano: Vous avez dit que toutes ces sociétés-là étaient sous ma responsabilité.

M. Odina Desrochers: C'est exact.

L'hon. Alfonso Gagliano: Je voulais dans un premier temps vous faire remarquer qu'il y avait des sociétés qui étaient sous ma responsabilité comme la Monnaie royale, comme la Société immobilière du Canada dont la vérificatrice générale qu'il n'y avait pas de problème de commandites.
À (1000) 

M. Odina Desrochers: Parlons de la Société canadienne des postes, parlons de la Société du Vieux-Port de Montréal.

L'hon. Alfonso Gagliano: Justement, moi je peux vous dire, monsieur Desrochers, que je n'ai jamais discuté des commandites avec les dirigeants des sociétés de la Couronne, c'est aussi simple que ça.

M. Odina Desrochers: Quelqu'un de votre bureau le faisait?

L'hon. Alfonso Gagliano: Non, pas que je sache.

M. Odina Desrochers: Est-ce que vous ne parliez pas à M. Guité ou à M. Tremblay à ce sujet-là?

L'hon. Alfonso Gagliano: Non, moi j'ai rencontré...c'est-à-dire que M. Guité et M. Tremblay venaient me rencontrer, demandaient un rendez-vous à mon bureau, puis on s'est rencontré quelques fois, ils venaient parler, par exemple, des budgets, qu'il fallait faire une liste des commandites pour aller devant le Conseil du Trésor mais...

M. Odina Desrochers: Ils ne vous ont jamais parlé de...?

L'hon. Alfonso Gagliano: Moi, disons, ils m'ont dit qu'on partageait des commandites avec les sociétés de la Couronne, et cela, j'ai été informé par M. Guité ou par M. Tremblay, mais je n'ai jamais discuté de ce sujet-là avec les dirigeants des sociétés de la Couronne.

M. Odina Desrochers: Monsieur Gagliano, vous n'avez jamais discuté du fait que c'étaient toujours les mêmes cinq agences qui avaient des contrats de la part de 
M. Guité et M. Tremblay?

L'hon. Alfonso Gagliano: J'ai été informé que les agences ont été choisies selon un comité de sélection dont les membres, il y avait deux membres de l'industrie, des gens du ministère.

M. Odina Desrochers: Comment pouvez-vous expliquer que vous ayez fait appel à ces agences pour travailler pour la campagne du Parti libéral du Canada en 1997? Est-ce Travaux publics qui payait ou si c'était le Parti libéral du Canada?

L'hon. Alfonso Gagliano: le gouvernement n'avait rien fait quand j'appelais le service de Groupaction ou de Groupe Everest ou d'ailleurs d'autres sociétés de communications au Québec. J'étais ministre du Travail et non pas ministre de Travaux publics et Services gouvernementaux.

M. Odina Desrochers: Vous étiez le ministre responsable de l'organisation politique.

L'hon. Alfonso Gagliano: Du Travail. J'étais responsable de l'organisation, ce n'était pas le ministre régional et...

M. Odina Desrochers: Mais vous étiez celui quand même qu'il fallait que...comment je dirais ça...

L'hon. Alfonso Gagliano: Dès 1994 j'ai été nommé ministre, je me suis retiré complètement du financement des partis politiques, c'était...

M. Odina Desrochers: Monsieur Gagliano, vous êtes ministre responsable du Québec et vous ne vous mêlez pas du financement?

L'hon. Alfonso Gagliano: Non, comme ministre, je...

M. Odina Desrochers: Vous êtes assez particulier, monsieur Gagliano.

L'hon. Alfonso Gagliano: Oui, peut-être, mais je peux vous assurer que dès 1994, du moment où j'ai été nommé ministre à la table du Conseil des ministres, j'ai même demandé conseil au conseiller en éthique et j'ai décidé de me retirer des activités de financement.

M. Odina Desrochers: Donc vous n'étiez pas au courant.

L'hon. Alfonso Gagliano: Il y avait un directeur général, il y avait un exécutif, moi j'étais dans l'organisation.

M. Odina Desrochers: Monsieur Gagliano, vous n'étiez pas au courant?
L'hon. Alfonso Gagliano: Je pouvais chercher des candidats et c'est la seule.

The Chair: Madam Jennings has a point of order.

Mme Marlene Jennings: Oui. Normalement quand on pose une question à un témoin on laisse au témoin le temps de répondre et ça fait maintenant au moins trois minutes que M. Desrochers pose des questions et interromp, alors je demande la simple courtoisie.

The Chair: That's not a point of order, Madam Jennings, but the courtesy is noted. 

Mr. Desrochers, if you are asking questions, of course the witness is entitled to respond. If you ask a general question, you sometimes get a general response. If you ask a specific one, you're entitled to a specific response.

Mr. Desrochers, s'il vous plaît.

M. Odina Desrochers: Il me reste combien de temps, monsieur Williams?

The Chair: You have about two and a half minutes.

M. Odina Desrochers: Écoutez, monsieur Gagliano, je vais vous poser une question pour savoir si j'ai bien compris. Vous étiez ministre des Travaux publics, vous étiez ministre responsable du Québec, vous étiez ministre au cabinet de Jean Chrétien, vous étiez ministre responsable du Programme des commandites, il y avait des sociétés de la Couronne qui relevaient de vous, qui ont profité de ce programme-là, et vous continuez d'affirmer que vous ne saviez pas que ça ne tournait pas rond au sein de cette section. Vous continuez d'affirmer également que vous parliez régulièrement à M. Guité et ensuite à M. Tremblay et vous n'avez jamais fait référence à tous ces montants-là qui circulaient, jamais vous n'avez été mis au courant qu'il manquait des pièces justificatives, jamais vous n'avez été au courant que les documents n'existaient pas, jamais vous n'avez été au courant que, sur un simple coup de téléphone, on octroyait un million de dollars? Vous n'étiez pas au courant de cela, monsieur Gagliano, même si tout ce secteur-là relevait de votre responsabilité?

L'hon. Alfonso Gagliano: J'ai été mis au courant par le rapport de vérification interne que j'avais moi-même demandé au printemps 2000.
M. Odina Desrochers: Alors pourquoi, monsieur Gagliano, lorsque le rapport du comité de Groupaction a été déposé et qu'on a tenté de vous faire venir, à ce moment-là la majorité libérale s'y étant opposée, vous étiez beaucoup plus muet qu'aujourd'hui? Qu'est-ce qui fait que vous avez changé de comportement et de façon de faire, entre le dépôt du rapport de Groupaction qui date de 2002, et celui de la vérificatrice générale? Ce que la vérificatrice générale a fait c'est un portrait global de ce qui était dit en plus petit dans le rapport de Groupaction. Expliquez-moi cela.

L'hon. Alfonso Gagliano: Je ne comprends pas, je dois vous expliquer quoi?

M. Odina Desrochers: Vous étiez également impliqué dans Groupaction, les trois rapports, les trois mêmes rapports qui ont coûté 1,5 millions?

L'hon. Alfonso Gagliano: Je peux vous dire que les trois rapports je ne les ai jamais demandés, je ne les ai jamais vus. Je l'ai appris par les journaux.

M. Odina Desrochers: Vous les avez autorisés par exemple.

L'hon. Alfonso Gagliano: Non, je ne les ai pas autorisés, je n'ai jamais autorisé un contrat.

M. Odina Desrochers: Merci, monsieur le président.

The Chair: You still have a minute. I would just say, you must allow Mr. Gagliano the opportunity to respond to the questions.
C'est tout?
À (1005) 
M. Odina Desrochers: C'est tout.
The Chair: Madam Redman, please, for eight minutes.

Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Mr. Chairman.

Mr. Gagliano, it's a pleasure to be able to ask you some questions. I have to tell you that this whole Auditor General report, which I certainly welcome, and as you point out in your presentation, was actually the result of an internal audit that was initiated by this government.

I'd like to go on the record saying that I do object to this being called the "sponsorship scandal". This is actually, I think, based, in essence, on an auditor general's report of a sponsorship program, and I think it would be much more fitting if we referred to it in that vein. 

When I talk to my constituents in Kitchener Centre, they are really happy to see that this government has taken a three-pronged approach. There's this process, there's certainly a judge in charge of trying to recover any funds, as well as some very, very troubling aspects, actually, of criminality, and they're being handled by the RCMP.

I think probably a little bit because of the Auditor General's report, and certainly because of what has happened in the press, you're seen to be perhaps a bit of a key to unlocking what actually happened in this process.

The Auditor General did expose the lack of checks and balances, and you, too, have acknowledged that in your presentation. I guess my question really is not that dissimilar to some of the aspects that Monsieur Desrochers was trying to touch upon. The questions that I get asked by my constituents are ones of political accountability, where the lines of reporting were, as far as a political presence is concerned.

Again, you've done a good job of pointing out how huge your portfolio was, but where did it come from, and who gave either implicit or explicit direction, on a political level, to say that these kinds of programs could go forward?

Hon. Alfonso Gagliano: Thank you very much for the question. 
First of all, I was appointed Minister of Public Works and Government Services in 1997, I believe June 11. The sponsorship program was in existence. You can see through a Treasury Board submission of November, 1996, signed by my predecessor and the Prime Minister, with a list of events, so it's clear that the program existed. 

When I became minister, I was briefed by my officials on the advertising and public opinion research service. At that time, those were the... And where, with the new Treasury Board guidelines where the advertising contract procurement was in that section. So therefore when I arrived, the sponsorship program existed. The special structure of the procurement contract was done from Treasury Board guidelines established in July, 1994. 

That's what my briefing was, so therefore, the only thing I agree with my officials since the privatization of the communications group, we are a bunch of services, like the Internet side, like the telephone answering, the 1-800-OCANADA that we called it after but before it was another system, the blue page and so on. 

After March, 1997 when the communications group was privatized, we had four or five services going out there without anybody really... And the government policy was to have all communications services regrouped into one entity and that's when we created CCSB, what is known as the Communications Coordination Services Branch, or something like this. 

And at that time, when I arrived at the department, I had no indication that there was anything wrong until the beginning of 2000 when we found out there were some problems, some control problems in the human resources department, and I felt since we were delivering these communications services through a private sector agency, I felt we should have an internal audit and make sure, you know, we don't have the same problem. 

Even though my deputy minister said the audit, that really Treasury Board was requiring was on grants and contributions, I said that regardless, sponsorship is not a grant or a contribution, but I would like to have an internal audit to make sure that everything is okay. And I have to say I was very upset when the internal audit of 2000, when I got an interim internal audit report--in the middle of the audit they came to see me--I was very upset. 

And that's when I said, "Should I call the police?", and they said, "No, there is no criminal intent there. It's only an administrative problem". We put 37 points in place. We called for a competition again for the agency, but I did more than that. 
At the same time, I asked my deputy minister to meet and start negotiation with the executive director of the Canadian Information Office and transferred the CCSB to Canada Information Office and kept in Public Works just the procurement service, so we could really separate the two and go back like they were before in July, 1994. 

It took a little while. The first thing, we only were able to transfer--first negotiation--the research opinion branch and then finally there was a change of deputy minister and also there was a change of director executive, a CIO , so immediately I asked the two--the new deputy director, the new deputy minister of public works and the director executive of CIO to get back to negotiations and in the summer of 2001 we were able to finally transfer and as of September 1 this became real and the Auditor General acknowledges all that in her report. 
So yes, there were problems but when we found out there were those problems, we took immediate actions and were corrected, and that's the role of a minister. You cannot correct something you're not aware of. 
À (1010) 

Mrs. Karen Redman: Can I also ask, too, because I think there's a lot been made of timing in this whole issue. Groupaction and Group Everest, had they done business with the previous government before the Liberal government came in, to your knowledge?

Hon. Alfonso Gagliano: I know for a fact that Everest yes was an advertising agency recognized doing business during Conservative government and before that we took office. I'm not sure about Everest but I want to add that all those agencies that the Auditor General talks in the report were already recognized in the department before I became Minister of Public Works and Government Services and even, I think before I even became minister but I was only appointed minister in September 1994.

Mrs. Karen Redman: And if we can look forward you've also gone forward in your brief and talked about better tools and how we can ensure that this doesn't happen and given your experience I'm really interested in your input but when I look at collectiveness, ministerial responsibility as well as the ability to deal with high level bureaucrats whether to hire them or fire them, it seems to me that that would open the door to what would be perceived as greater political involvement in a way that may not be as transparent as we would like to have.

I wonder if the audit function is as rigorous as it needs to be. I mean had the internal audit function been more rigorous perhaps...or how else we would get at the perception that there needs to be some kind of separation.

The Chair: Time has expired so I'll ask Mr. Gagliano to give a response please.

L'hon. Alfonso Gagliano: Well Mr. Chair, definitely I think in this case proves that the internal audit start the whole process should have a strong internal audit but the internal audit, I don't think should be in the department. Internal audit functions should be Treasury Board, we should have a strong...I believe that we should have annual...and I discussed this with the Auditor General, I mean...we ask for business to have annual audits. Why government programming shouldn't be audited annually.

Secondly, rotation system, we don't have a rotation system in the public service but we should have an efficient system so that we have more transparency when people move around.

The Chair: Thank you very much Mr. Gagliano.

Miss Wasylycia-Leis please, eight minutes.

Ms. Judy Wasylycia-Leis: Thank you Mr. Chair.

I know I shouldn't rise to the bait but..

The Chair: No don't.

Ms. Judy Wasylycia-Leis: But in response to Karen Redman and other any Liberals who want to take us down this line thinking, by any definition of decency and ethics in government, there was something wrong with the Sponsorship Program.

I think calling it a scandal is exactly what Canadians think of it as and I think we need to in fact pursue the line of questioning from the point of view of something being very very rotten.
À (1015) 

Mrs. Karen Redman: Point of order Mr. Chair.

I in no way was alluding it is not troubling and it does not need to be dealt with and that this committee...I am clarifying Diane...that this committee should not do due process in apse of diligence and get to the bottom of this. 

However in order for this not to appear or in fact be a witch hunt I think that this committee needs to be careful of the language which it uses.

The Chair: Your point is noted Miss Redman, it's not a point of order and scandal is a perfectly parliamentary word and if Miss Wasylycia-Leis wants to use it she may use it. I can't stop her from doing so.

Miss Wasylycia-Leis.
Ms. Judy Wasylycia-Leis: That's correct Mr. Minister but obviously the time taken on a point of order wouldn't be deducted against my time.

The Chair: Is added to your time of course.

Ms. Judy Wasylycia-Leis: Let me just begin by first of all thanking Mr. Gagliano for coming before our committee. I think we all appreciate the fact that you are here, that you didn't delay once you had returned to Canada and had been in contact with your lawyer and we certainly appreciate the fact in your statement that you said you seek justice and that's what we seek here too. 

We would know we've got to get to the bottom of where this money went and why it was syphoned-off in order to do exactly what you said in your opening remarks, to be true to democracy, true to our work as members of Parliament.

So if you accept the general thrust of the Auditor General then you would agree that we've got to follow the money and get to the bottom of it in order to ensure that, you know, politics isn't happening out there because of dirty money.

L'hon. Alfonso Gagliano: I agree with you definitely and this committee and I hope the public inquiry and I have been saying and I want to say I will cooperate and eager to appear before the public inquiry.

I think we'll have to find out exactly what happened.

Now that I'm back, definitely, now I have a lot of time on my hands, so you understand that I have been watching you practically on a daily basis. I saw, for example, that the actual deputy minister of Public Works tabled here or sent by mail a chart. I didn't see the details on TV, but if I could understand that chart, there is a list where the so-called $100 million went----with the names of the events, the communication agency, what was paid in commission, what were the production fees, whatever, the management fee or whatever they call it. There, definitely, there is something we have to find.

Ms. Judy Wasylycia-Leis: Right. We agree, we have to get to the bottom of it because it gives a bad name to politics and to this country in general. 
I appreciate the seriousness with which you took your job as a minister. As a former minister myself in the Manitoba government, I can testify as well how hard a job it is and how seriously we take our responsibilities.

What I don't understand is how it could be that a bureaucrat, that whoever knew what was going on, didn't come to you and give you a heads-up. Did no bureaucrat ever come to you and tell you something was amiss?

Hon. Alfonso Gagliano: No.

Ms. Judy Wasylycia-Leis: No one came forward. 

Did you seek that kind of feedback from your bureaucrats, from your deputy minister, from your ADM? It was out there, right? It was out there, so did you seek the information?
À (1020) 

Hon. Alfonso Gagliano: I had no indication whatsoever that there was something going wrong, so therefore I never asked, "Is there anything wrong?" Services were delivered. I, as a minister, whenever I was in the province of Quebec or anywhere else, I would see those services being delivered. I didn't know that there was a problem with the management of the files, with the invoicing or that the contractor was not giving a proposal, or there was no contract at all.

Ms. Judy Wasylycia-Leis: Are you saying that no one ever contacted you-your assistant deputy minister or your deputy minister-even though they knew because Allan Cutler had already come forward and there was a process in place-- 

Hon. Alfonso Gagliano: No, I didn't know. I learned about Allan Cutler at the same time you learned that here, by watching the committee, by reading the news.

Ms. Judy Wasylycia-Leis: That's interesting.

Hon. Alfonso Gagliano: I learned about the Ernst & Young report. I learned that there was the Allan Cutler situation. I learned that there was an internal report. This I learned like you did. Nobody ever informed me or briefed me when I arrived at the department even later that those problems existed.

Ms. Judy Wasylycia-Leis: Okay, I accept that, but I find it very hard to believe because as a former minister myself, I would expect that if there were something wrong in the department that was unethical or an indication of bad administration, I would need to hear about it and I would make sure that my deputy minister knew he had to tell me anything that happened. How is that you didn't have that kind of flow of information happening?

Hon. Alfonso Gagliano: Nothing...As I said, I was informed in June 1994 and 1997 when I became the minister that the program existed. There were new Treasury Board guidelines. We were delivering the program with an outside communication agency because we didn't have enough resources or expertise and this was going out there in the field and therefore they could enter into a bit of loss and we were paying 15% commission, and that's it.

Ms. Judy Wasylycia-Leis: Okay, I accept that. You also say in the last page of your report that would have liked to have the responsibility for hiring and firing key personnel in the department. By implication that sounds like that someone was foisted on you for some other reason that you had no control over, so where is the problem coming from? Was it Treasury Board? Was it the Prime Minister's Office? Who imposed on you these individuals who you had no control over?

Hon. Alfonso Gagliano: First of all, in my statement I want to clarify I made that suggestion in the sense if a minister has to be responsible, then you have to be responsible all the way and therefore--

Ms. Judy Wasylycia-Leis: Sure, but by implication it means you didn't have any control over the people--

Hon. Alfonso Gagliano: No, definitely--

Ms. Judy Wasylycia-Leis: So who put them there?

The Chair: We'll have questions and answers and not a multidialogue going across the table.

Ms. Judy Wasylycia-Leis: All right, sorry.

Hon. Alfonso Gagliano: When I was appointed Minister of Public Works and Government Services in June of 1997 my deputy minister was there, all the assistant deputy ministers were there, Mr. Guité was there. In other words, you arrive as a minister and here is what we're doing. Those are the briefings, those are the files and if there is a problem they're supposed to tell you there's a problem in that file and make you a recommendation, but the minister doesn't fire or hire anybody in his department. So I was making that reference in terms of responsibility. How can you be personally responsible if you don't have control of those who are supposed to help you to do so--

Ms. Judy Wasylycia-Leis: So it still begs the question who had the control? Who was driving the agenda?

I have one more quick question.

The Chair: We'll have to come back. Your time has expired. I'm sorry about that, I wish I could allow everybody to continue their own line of questioning forever.

Mr. MacKay, please, eight minutes.

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

Mr. Gagliano, welcome back. Mr. Fournier.

The Hon. Alfonso Gagliano: Thank you.

Mr. Peter MacKay: You said just a moment ago that you know where the money was. You said you knew where the money went. There were millions went missing and I think that's the crux of the matter for a lot of Canadians. It's taxes. A lot of people are concerned about where the money went. 

You also said earlier in your opening statement "A minister does not run his department. He has neither the time nor the freedom to do so". That is an alarming statement, I think, given the circumstances of ministerial responsibility and what has happened here. Just in the exchange with Ms. Wasylycia-Leis, you said you got a briefing when you came into the Department of Public Works. I suspect that Mr. Guité gave you that briefing. Is that correct?

Hon. Alfonso Gagliano: I believe Mr. Guité would be...the deputy minister, maybe an associate deputy minister, I don't remember exactly.

Mr. Peter MacKay: Was there anybody from the PMO present during those briefings?

Hon. Alfonso Gagliano: There is nobody from the PMO for ministerial briefing, no.

Mr. Peter MacKay: And did those briefings include a description of how the sponsorship program itself was to operate?

L'hon. Alfonso Gagliano: Yes, in general; a very general description.

Mr. Peter MacKay: There was an atmosphere at that time that was later used as a justification for some of the spending that went on in your province of Quebec and that had to do with the referendum. You were aware of that atmosphere in which this sponsorship program was operating, correct?

Hon. Alfonso Gagliano: Yes, definitely.

We had no problem in other provinces. The province of Quebec was the only province that had a government that wanted to separate from Canada and therefore we wanted to ensure that we had a good presence of the Government of Canada, that Quebecers could understand they were part of Canada.
À (1025) 

Mr. Peter MacKay: So the spending was directed at raising the profile of Canada inside Quebec?

Hon. Alfonso Gagliano: That was the objective of the program and that objective was established even before I arrived. 

Mr. Peter MacKay: You bought into the Prime Minister's objective which was that this spending could be justified because it was to save Canada, correct?

Hon. Alfonso Gagliano: The objective of the program was very good. It was, yes, to keep the country united. It was a national unity strategy, but the Prime Minister and myself, anybody, and if you look at the cabinet documents that you have before you, there is always a mention that those moneys were supposed to be spent according to the Public Administration Act and the Treasury Board guidelines. Nobody ever gave instruction to anybody not to do the things that were supposed to be done. 

The objective of the program, yes, was a very good program and the proofs are there. If you look, the public opinion research and so on, we even have a federalist government now in Quebec.

Mr. Peter MacKay: Mr. Gagliano, you still maintain it was a good program even though the Auditor General issued a scathing report, in fact two scathing reports that touch upon massive mismanagement, waste, money that went missing? And you maintain still that this was a good program, a good program for taxpayers? Would you go so far as to say that?

Hon. Alfonso Gagliano: I say that the objectives of the program were very good, national unity. The unity of this country is very important. Unfortunately, there were management problems. The Auditor General....Even before the Auditor General was made public, the internal audit of 2000 which I ordered all the changes, there are police investigations and I think the previous and different governments are doing everything they can to get to the bottom of this thing.
But the objective of the program was good, unfortunately, it was badly managed.

Mr. Peter MacKay: They were management problems, essentially. What I'm gleaning from your testimony is that even though you had your fingers in a lot of pies--you were a Quebec minister, head of an ad hoc cabinet committee on government communications, you talked about your role as briefing other ministers and other departments and your busy activities in Quebec, and in your constituency.

And yet with your fingers in all those pies, you're telling us today that you were essentially a finger puppet of your own department, that you had no control over the sponsorship program and how this money was being administered, doled out and the specific contracts that went to Liberal friendly advertising firms in your province. You didn't make those decisions. Is that your testimony today?

Hon. Alfonso Gagliano: Mr. Chair, first of all, I object to the word puppet and I would remind everybody that I'm no longer in politics. I'm a private citizen and I think I came here of my own free will and I don't expect to be insulted.

The Chair: I think Mr. MacKay was referring to your statement about your management responsibility while you were a minister.

Hon. Alfonso Gagliano: But I'm not a puppet. I take that as an insult and I expect an apology.

Mr. Peter MacKay: Mr. Gagliano, you're here to answer questions about your time as a minister. You may be here as a private citizen today but the subject of this examination is about taxpayers' money that went missing on your watch, sir.
That's what we're here to examine today.

Hon. Alfonso Gagliano: I remind you that I'm here voluntarily and I am ready to answer all the question but I don't expect to be insulted, by you or anybody else.

Mr. Peter MacKay: Well, you're here to answer questions and you talked earlier about accountability to the people of this country.

Hon. Alfonso Gagliano: Ask the questions with the proper language and I'll answer.

The Chair: Mr. Gagliano, Mr. MacKay has the floor.

Mr. Peter MacKay: I have a question for you, Mr. Gagliano. You chaired this ad hoc committee. This set up was to take place between 1998 and 2001 and I suggest to you that other ministers of Mr. Chrétien's government, your colleagues, were also part of that committee.

Hon. Alfonso Gagliano: There was a number of ministers, yes, cabinet ministers, minister seats on that committee.

Mr. Peter MacKay: They included the current Prime Minister, then Minister of Finance Paul Martin.

Hon. Alfonso Gagliano: I don't think so.

Mr. Peter MacKay: You don't believe he was present.

Hon. Alfonso Gagliano: Mr. Chair, here I need some guidance again, on the things we discussed this morning. Are those cabinet committees that the member is asking me about, are they public? If they are public I am willing to answer.

The Chair: I don't see that it's a state secret, Mr. Gagliano, which cabinet minister sits on which committee and I would think that you should be able to answer.
À (1030) 

Hon. Alfonso Gagliano: Okay, fine.

Mr. Peter MacKay: Mr. Gagliano, I'll ask this specific question. You chaired this ad hoc committee.

Hon. Alfonso Gagliano: Yes, I was the Chair.

Mr. Peter MacKay: You agree with that. I am suggesting that members of that committee included: Anne McLellan, Ralph Goodale, Andy Scott, David Anderson and the current Prime Minister Paul Martin.
Is that correct?

Hon. Alfonso Gagliano: No, I agree with all the others but I do not remember that the current Prime Minister was a member of the communications cabinet committee.

Mr. Peter MacKay: You do not recall Paul Martin being present at any of the meetings that took place of this ad hoc committee on communications?

Hon. Alfonso Gagliano: His office, yes, when we were discussing budget communication but I don't recall him--

Mr. Peter MacKay: Members of his office staff.

Hon. Alfonso Gagliano: I beg your pardon.

Mr. Peter MacKay: Members of his office staff would have been present.

Hon. Alfonso Gagliano: Yes, when we were discussing budget communication strategy.

Mr. Peter MacKay: Would those persons have included Terrie O'Leary?

Hon. Alfonso Gagliano: I don't recall. I don't think she was in office then.

Mr. Peter MacKay: Mr. Littler.

Hon. Alfonso Gagliano: I don't recall the name. I know that there were people from the minister's office during the budget communications strategy but--

Mr. Peter MacKay: Did Terrie O'Leary ever contact you or your office directly on behalf of the Prime Minister on any subject matter dealing with sponsorship?

Hon. Alfonso Gagliano: No.

Mr. Peter MacKay: The Treasury Board referred specifically in documents and in testimony we've heard already to money laundering. Have you ever heard that expression of the context of this sponsorship program?

Hon. Alfonso Gagliano: No. I heard it through the committee, watching the committee hearings.

Mr. Peter MacKay: With respect to the Auditor General's report itself, do you disagree with the findings of that report, the question posed to you earlier by Ms. Ablonczy? Do you disagree with Ms. Fraser's findings, that essentially these rules were broken, that money has gone missing, that money is unaccounted for?

Hon. Alfonso Gagliano: I agree, like I said, of the general trust. In terms of the $100 million, like I already said, I mean, we know where the money went. You have a chart.

Mr. Peter MacKay: Where did that money go?

Hon. Alfonso Gagliano: Well, you have a chart. I don't have the list. You have the list. It was tabled to this committee.

The Chair: Thank you, Mr. MacKay. Madam Jennings, please. You have eight minutes.

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

The Chair: Point of order, Mr. MacKay.

Mr. Peter MacKay: Mr. Chair, at the end of the session here today, could I request that briefing books and briefing notes that were referred to by this witness when he took office, when he was first appointed to cabinet, that those briefing books be the subject of an examination by this committee as well?

The Chair: Okay, I'll take that as a notice of motion, Mr. MacKay. We can't adopt any motions today, so we'll take that as a notice of motion. The clerk will make sure that we discuss it at a subsequent meeting.

Madam Jennings, please.

Mrs. Marlene Jennings: Thank you. Thank you, Mr. Chair. Thank you very much, Mr. Gagliano, for coming before this committee and for answering the questions of the committee. I do have a couple of questions.
One, your nomination to cabinet as minister of public works was in June, 1997.

Hon. Alfonso Gagliano: Yes.

Mrs. Marlene Jennings: That's the point at which you were sworn in.
Shortly thereafter, you would have received briefings and from responses that you've given to questions asked by some of the members of this committee, the deputy minister, the then deputy minister of public works, Mr. Ran Quail, was definitely present at these briefings.

Hon. Alfonso Gagliano: Yes.

Mrs. Marlene Jennings: You've stated that you believe that at least one or more assistant deputy ministers were present, including Mr. Chuck Guité, who wasn't at that point I don't believe an assistant deputy minister, but-- 

Hon. Alfonso Gagliano: --If I may answer and explain how...the department of Public Works and Government Services is so large that for the first two weeks, I had practically scheduled briefings for different divisions and general divisions and so on. So therefore I cannot recall exactly who was there and the deputy minister was coming with the appropriate...some were assistant deputy ministers, some were directors general and so on. This was a continuing flow of information and people coming and seeing me to give me those briefings.

Mrs. Marlene Jennings: I understand.
Thank you. That's quite important. You've also stated that during these briefings, at no time were you informed of the existence of a Mr. Alan Cutler, public servant, employed by Public Works, in the advertising, polling and opinion research sector. At no times during those briefings. You've testified to that. You've also informed us that at no time in those briefings were you informed that subsequent to a complaint that Mr. Cutler made, an internal audit of APORS was conducted.

You've also stated that at no time were you informed of the existence of that internal audit or of the subsequent external audit in 1996 conducted by Ernst and Young. You've since learned of the existence of Mr. Cutler, the internal 1995-96 audit, and the external 1996 audit of APORS headed by Mr. Chuck Guité. Am I correct? 


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