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Gagliano's testimony 
Day 2 (part 2)

(PoliticsWatch posted March 19, 2004) OTTAWA - Standing Committee on Public Accounts
Comité permanent des comptes publics
Transcription  11 :05 a.m. to 1:00 p.m.  Transcription jusqu'à 11:05 seulement

The Chair: If it's the agreement of the committee that we continue on, then I'm quite prepared to continue on and either postpone the break or continue through the break.
Mr. Toews.
Á (1105) 
[No Salutation Found] UNKNOWN UNKNOWN: Cancel the break.

Mr. Vic Toews: I think Mr. Kenney is going to be here right until 1, so the Conservative party is going to b represented here.

The Chair: No, Mr. Toews.
Let me ask, is it the guidance or the wish of the committee that we continue on and waive the break?

An hon. member: Hear, hear!

The Chair: It is. And it's also agreed that those who have to leave will ask questions first. Is that agreed?

Ms. Ablonczy, are you ready?

Mrs. Diane Ablonczy: I'm always ready with questions, Mr. Chairman.

The Chair: Okay. Eight minutes, Madam Ablonczy.

Mr. Toews, I believe you may be next.

Mrs. Diane Ablonczy: Mr. Gagliano, as you know, your testimony in front of this committee was looked forward to with a great deal of anticipation by Canadians. We were finally going to hear from the man at the top. We were going to get the real story about what had happened.

To everyone's dismay, disappointment, and anger, the only thing we've heard from you so far is that you know nothing. You weren't really in charge. You were just there, I guess. I don't know why you were drawing a salary particularly. You didn't know what was going on. You didn't talk with anybody about what was going on. You didn't bother to read the documents about what was going on.
In anticipation of giving the committee, giving Canadians some real answers, Mr. Gagliano, before you appeared yesterday and today, did you talk with your former deputy minister, Mr. Quail?

Hon. Alfonso Gagliano: Could you repeat the question, please?

Mrs. Diane Ablonczy: Before you appeared in front of the committee yesterday and today, in anticipation of giving this committee some facts, did you speak with your deputy minister, former deputy minister Mr. Ranald Quail?

Hon. Alfonso Gagliano: No.

Mrs. Diane Ablonczy: Did you speak with Mr. Guité?

Hon. Alfonso Gagliano: No.

Mrs. Diane Ablonczy: Did you speak with Mr. Pierre Tremblay, your former executive assistant?

Hon. Alfonso Gagliano: No.

Mrs. Diane Ablonczy: Did you speak with Mr. Bard, your other former executive assistant?

Hon. Alfonso Gagliano: Yes.

Mrs. Diane Ablonczy: What was the nature of that conversation, sir?

Hon. Alfonso Gagliano: I was trying to prepare myself for coming here. 

Mrs. Diane Ablonczy: What did he tell you? What facts came out in that conversation, Mr. Gagliano, that may be helpful to this committee?

Hon. Alfonso Gagliano: The facts that came out.... I was trying to recall the event. Since he was my chief of staff for the period in which this program was run, I was....

For example, I've been saying that we were receiving representation and it was transferred to my executive assistant and the staff to follow, to the director executive office and so on, so I wanted to check if that was okay.

For example, I recall that I asked whether I should call the police when I got the verbal interim auditor report. I said, did I dream of it? I think I asked that question. He said, yes, I was there and you asked that question.

I was trying to confirm, as best I could, my memory.

Mrs. Diane Ablonczy: Mr. Gagliano, excuse me. Please, I only have eight minutes, and we have to use it usefully.

Is there anything, Mr. Gagliano, that came out in your discussion with Mr. Bard that has not yet been brought before the committee in your testimony yesterday or today?

Hon. Alfonso Gagliano: No. 

Mrs. Diane Ablonczy: Then, let's not waste our time. Did you speak with Mr. Boulé, formerly of Group Everest?

Hon. Alfonso Gagliano: No.

Mrs. Diane Ablonczy: Did you speak with Mr. Lafleur?

Hon. Alfonso Gagliano: No.

Mrs. Diane Ablonczy: Did you speak with Mr. Pelletier, the former chief of staff to the former Prime Minister?

Hon. Alfonso Gagliano: Yes. After I gave the interview to the media, he called me in support and understanding of what I was going through.

Mrs. Diane Ablonczy: Did anything come out in that conversation, Mr. Gagliano, that should be laid before this committee?

Hon. Alfonso Gagliano: No.

Mrs. Diane Ablonczy: Did you speak with anybody at all, Mr. Gagliano, so that you could give Canadians and this committee some real facts about what happened to millions and millions of dollars that the auditor general said were improperly spent by your department? Did you talk to anybody so that you could inform yourself in anticipation of appearing here today?

Hon. Alfonso Gagliano: I spoke to my former chief of staff who refreshed my memory and I checked with him if what I recalled was what happened and so I had those conversations.

Mrs. Diane Ablonczy: But basically nothing came out of that conversation of any assistance to this committee?

Hon. Alfonso Gagliano: I've been answering since yesterday all those questions.
Mrs. Diane Ablonczy: Mr. Gagliano, you testified that you were the minister for Quebec.

Á (1110) 

Hon. Alfonso Gagliano: Yes.

Mrs. Diane Ablonczy: In that capacity would you not have taken an interest in appointments made in the Province of Quebec?

Hon. Alfonso Gagliano: In that capacity, let me explain how the appointments are made. The appointments are made by the minister--

Mrs. Diane Ablonczy: I don't want to hear how they're made. My question is would you have taken an interest in the appointments that were made?

Hon. Alfonso Gagliano: As a minister for Quebec, collectively with the other ministers of Quebec, yes.

Mrs. Diane Ablonczy: Would you have taken an interest in how program money was spent in the Province of Quebec.

Hon. Alfonso Gagliano: Each department manages its own programs so my--

Mrs. Diane Ablonczy: That's not my question.

Hon. Alfonso Gagliano: I'm giving you the answer that I know and that is my responsibility as a minister for Quebec, I would make sure the Quebec programs would get their fair share.

Mrs. Diane Ablonczy: So you would take some interest in how program money was spent in the Province of Quebec.

L'hon. Alfonso Gagliano: Sure.

Mrs. Diane Ablonczy: With respect to the sponsorship program what you testified was to save Quebec from the clutches of the separatist. Would you have taken an interest in how that money was spent in the Province of Quebec?

Hon. Alfonso Gagliano: Yes, but in terms of visibility. What we're talking about here is how the rules were broken.

Mrs. Diane Ablonczy: I'm just asking, Mr. Gagliano, what you would have taken an interest in. But in spite of this interest that you would have taken in appointments, in program spending, and particularly in the sponsorship spending, in the Province of Quebec, your evidence before this committee is you really didn't know who got the money or why they got the money or the good will that might have been bought with the money. You're telling us that you're really very dim about all of these things. Is that what you're telling us?

Hon. Alfonso Gagliano: I disagree with you in that regard. I have been saying that there were discussions with Mr. Guité concerning a list of events and every time we had to go over the budget--

Mrs. Diane Ablonczy: But, Mr. Gagliano, you're saying that only happens--

Hon. Alfonso Gagliano: Mr. Chair, I mean--

Mrs. Diane Ablonczy: Mr. Gagliano, please. I only have eight minutes. Please let me direct the questioning.

Hon. Alfonso Gagliano: Well, I cannot give you an answer if you don't give me the time.

Mrs. Diane Ablonczy: You're saying that you met with Mr. Guité only two or three times a year, is that correct?

Hon. Alfonso Gagliano: My recollection is three or four times a year. I don't have my agenda and so I cannot confirm the exact number of times.

Mrs. Diane Ablonczy: Mr. Gagliano, you've also testified that you didn't really run your department. I assume that it's only faceless bureaucrats that run the affairs of Canada, not the people we elect, not the people we appoint as ministers of the Crown. Is that your evidence?

Hon. Alfonso Gagliano: What I said was that as a minister we're involved in creating policy, having debates, cabinet meetings every day, hours of debate on different programs. For example, I spent a lot of time debating and creating the program of affordable housing. I was definitely a very busy person.

Mrs. Diane Ablonczy: I understand that, sir, but if you don't know how the policies are carried out, what's the point? It's just a debating .

Hon. Alfonso Gagliano: I knew what the policies were. I didn't know about the micromanagement of the day-to-day management. I was not appointing the agencies. I was not deciding which agencies should get the contract. I didn't decide which events--we had discussions in terms of the budget and then the civil servants would continue to do their job.

Mrs. Diane Ablonczy: Mr. Gagliano, I would suggest to you, sir, that you have played this committee for fools.

You have come to this committee and said "I didn't run anything. I didn't know what was going on. I was at the mercy of what somebody told me". 

You said that in spite of the fact that you're the minister for Quebec, I don't know who got the contracts. I don't know why moneys were misspent. I don't know why moneys went missing. I know nothing.

Mr. Gagliano, I hate to say this, but I'll tell you something. I don't believe you and I'll tell you something else. Canadians don't believe you.

Who are you protecting, Mr. Gagliano? Why aren't you telling what you really know? What you really talked about? What really happened in your department? 

Who are you protecting, Mr. Gagliano?

Hon. Alfonso Gagliano: Mr. Chairman, I'm going to stay calm, because I think the accusation is very serious. First of all, let me say I'm not protecting anybody, that 
I'm telling what I know, the way that the facts....The committee might judge that I exercised my responsibility or I'm incompetent, that's your judgment. I'll leave it with my judgment. But that's what I'm doing, Mr. Chairman and that goes for everybody, including the media.

I'm not expecting anybody to believe my story, because for the past two years you have condemned me and all of you and in public that I was the mastermind of a program. I don't expect that I spend a day and a half before this committee and you're going to believe my story. But I think in due time through this committee when you have more witnesses, though the public enquiry, I'm sure the truth will come out, Mr. Chairman. That's all I have to say.
Á (1115) 
The Chair: Well, we'd have hoped, Mr. Gagliano, that the whole truth would come out at this committee as we hear all the witnesses that we have heard from and will be calling forward. It's for this committee to get to the facts, to believe we have got to the facts, believe we have got to the truth to be able to table a report in the House of Commons saying this is what transpired, this is our recommendations, whatever they may be. 

We are dealing, as I said, with responsible government where ministers are responsible to Parliament; Parliament is responsible to the people. This is why we have a serious obligation to continue to press for what we consider are....for more information, factual information on the table.

Mr. Toews, please, eight minutes.

Mr. Vic Toews: Thank you.

Mr. Gagliano, in respect of your concern about you perceived as incompetent, let me assure you, I don't consider you incompetent at all.

Mr. Gagliano, you came to this hearing and you indicated that you read the Auditor General's report three times and you appear to be well briefed on the contents of that. You spoke with my colleague, Mr. Kenney, about the 2000 audit, a very important audit, certainly, for the running of the government, a very important audit. In fact you felt it was so important that you took the opportunity to call for that audit. Isn't that correct? 

Hon. Alfonso Gagliano: Yes.

Mr. Vic Toews: Very important and indeed not only did you think it was important, your deputy minister thought it was important and he called for the audit as well. 

So we have here not just a matter of the civil service, the public service, asking for the audit, but you, yourself, as a minister, Mr. Gagliano, you, yourself, had that.

Now you got a briefing on this particular audit and you had a verbal summary of this audit and you were assured and you're agreeing with me--you're nodding in agreement--and you were assured there was no criminal wrongdoing on the basis of the briefing that you received. Is that correct?

Hon. Alfonso Gagliano: Yes.

Mr. Vic Toews: That's correct. Now, Mr. Kenney earlier read directly from that audit, the 2000 audit, page 15 of the 2000 audit and he read directly from that. He didn't tell you where that was from, but you said "Had that come to your attention, you would have taken a very different approach to the action you took", because it clearly indicated criminal activity.

Then when Mr. Kenney disclosed to you that came right out of the 2000 audit you indicated to this committee that you had never read the 2000 audit, the audit that you thought was so important, that your deputy minister thought was so important, an issue of grave concern in your department and you didn't even read the report. And remember, Mr. Gagliano, this is an 18 page report. This isn't even as big as the Auditor General's report and you read the Auditor General's report three times. Why didn't you read the 2000 audit at least once?

Hon. Alfonso Gagliano: Mr. Chairman, I have in front of me the page that was referred that I would like Mr. Toews, on behalf of Mr. Kenney, if he can tell me to which paragraph he is referring. 

Mr. Vic Toews: He quoted it to you. It says--

Hon. Alfonso Gagliano: Which paragraph? Sorry. The paragraphs are numbered.

Mr. Vic Toews: ^Paragraph 2.3.2, the second full paragraph. Now that's already been put to you. You indicated you didn't read the report. Mr. Gagliano, if this was so important to you that you called for it, you didn't even read the report, and yet you read the Auditor General's report three times. Why didn't you read this report, 
Mr. Gagliano?
Á (1120) 
Hon. Alfonso Gagliano: Mr. Chairman, I'm reading this page, and this paragraph--

Mr. Vic Toews: No, no, no. Mr. Gagliano, you indicated at the time that you never read this report. Why not? Why not?

Hon. Alfonso Gagliano: Yes, but what Mr. Kenney read me, I cannot find in the page that is referred to me. So was I misled?

The Chair: I think the question by Mr. Toews is fairly simple, Mr. Gagliano. You've said on numerous occasions before this committee that you hadn't read the report. The question of Mr. Toews is why didn't you read the report. That's a fairly simple question.

Hon. Alfonso Gagliano: Because I trust the internal audit, and my deputy minister that they were telling me the truth, and I concentrated myself with the report. 

What I want to know is was Mr. Kenney was reading from internal report, or the Auditor General's report. That's what I was trying to find out, where I was misled by the committee.

Mr. Vic Toews: As I indicated earlier, this individual isn't incompetent. He knows I have eight minutes. I've said page 15 of the internal audit report.

Mrs. Marlene Jennings: Point of order, Mr. Chair.
It doesn't come off his time. He'll still have his time.

The Chair: Point of order.

Mrs. Marlene Jennings: Point of order. The witness was asked a question, and quotations were read from a document. The witness is unable to find where that quotation is located. I think it incumbent on the member who is asking the question to clarify. Is it from the Auditor General's report? Is it from the internal audit report that he's also raising? Which document is it from?

The Chair: Mr. Toews, can you name the document?

Mr. Vic Toews: It's very clear, Mr. Chair, that it was the audit report, page 15. I've stated it a number of times.

The Chair: Just a second. I believe Mr. Toews you'r talking about the directed audit of the management of sponsorship--

Mr. Vic Toews: That's correct.

The Chair: --the Communication Coordination Branch, CCSB, final report.

Mr. Vic Toews: That's correct.
The Public Works and Government Services Canada audit and review branch, 2000-08-31, page 15, the one that this witness indicated he hadn't read.

The Chair: Okay. We've got the reference. Okay. That's fine, because normally we put on the record the document that's been quoted.

Let me just rephrase my question, and then I'll put the question to the witness: why didn't you read the report that you specifically called for when you learned of difficulties in your department?

Mr. Vic Toews: 

Hon. Alfonso Gagliano: Mr. Chairman, I said I received a verbal briefing, and I concentrated my belief, and I trust, and I still today I have no reason not to believe the internal audit or my deputy minister, and all my energies, and all my time was to make sure that those things that the internal audit was saying were corrected immediately, and worked on the action plan.

Now I want to say something else, Mr. Chairman, I will read the blues, and I will determine what Mr. Kenney said reflects exactly internal report. I just want to be on the record that I didn't find the exact wording.

The Chair: If you want to correct yourself, you can write to the clerk.

Hon. Alfonso Gagliano: I hope Mr. Kenney does the same thing.

Mr. Vic Toews: So you knew that something was going on wrong inside your department. You got people inside your department to do the report. Instead of reading the report you relied on verbal information from people in your department. Is that correct?

Hon. Alfonso Gagliano: Yes, and I--

Mr. Vic Toews: And are you saying--

Hon. Alfonso Gagliano: --very professional, I had a very professional....

Mr. Vic Toews: I understand, and you stated that. I understand that. So you're saying that despite the fact that the staff was very professional, your deputy minister misled you in terms of summarizing the impact of this report if this report in fact indicates that there's some criminal wrongdoing. He misled you.

Hon. Alfonso Gagliano: No. I don't believe that my deputy minister misled me. I think the deputy minister that we had. So I--

Mr. Vic Toews: You said that he told you that it was only administrative problems, and yet that paragraph that Mr. Kenney quoted to you clearly indicates, and you agreed, that there was criminal wrongdoing.

Hon. Alfonso Gagliano: But I reserve my right now to read in the minutes that paragraph to see if it corresponds what is in the document.

The Chair: Mr. Toews, are you talking the second paragraph under 2.32?

Mr. Vic Toews: That's correct.

The Chair: Let me read the paragraph to you, Mr. Gagliano:
Because CCSB does not analyze or document a detailed breakdown of the production budgets, it is impossible to verify if CCSB received in full the services for which the CA was retained. The invoices charged against the production budgets for most of the files audited did not contain a sufficiently detailed breakdown of the amounts charged or the services provided. For those invoices which did provide some details in the breakdown of amounts being billed, we concluded the amounts being charged were for products/services more appropriately considered management of the sponsorship and therefore to be included in the 12% commission fee paid, and not for products/services appropriate to the use of the production budget.

That's the paragraph you're talking about, Mr. Toews?
Á (1125) 
Mr. Vic Toews: That's correct.

The Chair: So that is the paragraph that Mr. Toews...and you have it in front of you.

Mr. Toews, you have one minute left.

Mr. Vic Toews: What I'm puzzled about, Mr. Gagliano, is that you called for the audit--you thought it was so important, your deputy thought it was important--it's not a weighty document in the sense of length--it's 18 pages--and you chose for some reason not to read it. The fact is, you took a personal interest in calling for the audit, you didn't read it. 

In respect to the Auditor General's report, you read it three times. Why was that worthy of reading three times, and the very report you called for wasn't even worthy of reading once?

Hon. Alfonso Gagliano: Mr. Chairman, I've been saying from the beginning, I got a briefing, interim internal report verbal briefing. When I got that briefing, the report was not written. I got that internal briefing after the internal auditor audited about 100-and-some files and he decided the problem was serious. He came to see me--with the deputy minister, I believe there was another official, the director executive of the program was present and my executive assistant was present--and informed me that there were serious management problem.

I couldn't have read the report at that time, the report was not written. He told me there was a serious management problem. I said, "Should I call the police?" He said, "There is no criminal evidence". So, I said, "Give me a plan of action to correct all those things". They did. We created the new agency. I froze the program at that time, and I said, "Go and order the rest of the files". After a while, 
I was informed that the same problem was in the rest of the files. I concentrated on applying that plan of action, make the necessary change, transfer the program from Public Works to Communications Canada. That's where I concentrated myself. I couldn't have read the report.

Mr. Vic Toews: You never read the report. You never read the report, even when it was completed. Even when it was completed, you never read it.

The Chair: Mr. Toews, Mr. Toews.

Hon. Alfonso Gagliano: The plan of action was in place. Everything was done.

The Chair: Mr. Gagliano, I think if I understood you correctly, you were saying that you got a verbal report from the auditor who was going to write the report. You got it before--

Hon. Alfonso Gagliano: Yes. Mr. Steinberg.

The Chair: Okay. That's fine. So now from the very person who had collected all the information, before he wrote his report, he gave you a full briefing of what he was going to put in his report, including the fact that there were serious problems. You didn't ask for the final report after it was written to see that it was in line with your verbal--

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

The Chair: So there is a chance you did read the report?

Hon. Alfonso Gagliano: I don't recall reading the full report.

The Chair: Okay.

Hon. Alfonso Gagliano: I have to say what I remember, what I know.

The Chair: Now, you're saying there's some doubt. Okay.
Madame Jennings, we're going to return to you, and because we cut you off in the middle, I'm going to give you an extra minute or so. Madame Jennings.

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

Mr. Gagliano, you just brought forward a name that this committee has not heard of but has seen in documents, and that is the auditor at Public Works, the assistant deputy minister, I believe it's government services audit, etc., whatever the title is, Mr. Stein--

Hon. Alfonso Gagliano: I believe his name is something like that.

Mrs. Marlene Jennings: Is it Mr. Steinberg?

The Chair: It's Mr. Steinberg.

Mrs. Marlene Jennings: If I were to tell you that Mr. Steinberg is the one who signed the report of the internal audit in 1996 of the advertising, polling, opinion research sector headed by Mr. Guité who was at that time, I believe, an EX-1, and said internal audit was conducted because a complaint was filed by Mr. Allan Cutler, and that said internal audit found that all of the allegations of Mr. Cutler were founded and as a result of that an external audit by Ernst & Young in 1996 was conducted and that external audit found that there was no expertise for procurement within that branch of APORS which became sponsorship headed by Mr. Guité, would you not have wished to have that information as being material to your responsibility as a minister?

According to the definition of ministerial responsibility, Mr. Gagliano, you are responsible for what happened at public works in the sponsorship branch while you were there.

Would you not consider it better, given that fact and that it was your responsibility, and you are responsible whether you knew of it personally or not, to have known that there was an internal audit of the successor of sponsorship in 1996, that the internal audit which was conducted under the auspices of Mr. Steinberg found that there were contracts that were not properly given, that there was backdating of invoices, that there were requisitions that were falsified in order to cover up the fact that contracts had already been given, work had already been done and payments had already been made?

Do you not think it would have been material for you to have received that information during the briefings that you received after you were appointed?

Á (1130) 
Hon. Alfonso Gagliano: Definitely I would have liked it and I think a minister should be receiving all the internal audit reports. That's the only management tool through which really the minister can know what happens down there in his own department. 

That's what I've been telling this committee since yesterday but I was not informed that there was an internal audit in '96, neither that it was an external audit in '96. I arrived at the department in '97 and I was not briefed on that.

So, therefore, and here it goes to the heart in talking about responsibility. How can a minister be responsible when he doesn't know, when he's not informed? This is the debate that this committee in Parliament definitely has to have if we want to talk about ministerial responsibility.

Also, the information that is given to that minister--

Mrs. Marlene Jennings: May I interrupt for one moment, Mr. Gagliano? When you were appointed Minister of Public Works or when you were appointed minister of your portfolio preceding public works, and you received briefings, did you ask, "Has this department ever been audited by the Auditor General and are there any systemic problems that have been identified by the Auditor General?"

Hon. Alfonso Gagliano: I don't recall exactly if I asked that question in those terms but definitely on the Auditor General every time. I mean, I had two departments--labour and public works--yes, I always wanted to be informed what the Auditor General would have said in the past to see if I could detect previous problems so that I could. But in the case of public works I don't think there was an Auditor General's report on the communications or sponsorship file.

The Chair: Thank you, Ms. Jennings.

Mr. Gagliano, you mentioned just a few minutes ago that you had a direct personal briefing by Mr. Steingberg who was writing this report, the final report that Mr. Toews was talking about and Madam Jennings pointed out that he was the same auditor who did the 1996 audit when Mr. Guité was pointed out as having broken an awful lot of rules back then, too.

Did Mr. Steinberg say to you in the personal briefing, "By the way, this is the same department and the same people that I wrote about four years before." Did he not mention that to you?
Á (1135) 
Hon. Alfonso Gagliano: No.

The Chair: I find that rather strange, that the internal auditor would not go back in his own memory and say, "Same people, same department, same problems, nothing's changed". No?

Hon. Alfonso Gagliano: I believe, if he would have recalled that, then he would have answered my question about calling the police differently.

The Chair: Thank you very much.
Mr. Murphy, please, eight minutes.

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

Mr. Gagliano, I don't have a lot of confidence in myself to elicit a lot of additional information on yourself after a day-and-a-half of testimony. I'm going to try a little different angle here.

There's a concept known as "similar fact evidence", and your evidence is that you, as minister, didn't know anything or you didn't do anything on this sponsorship issue. But, there's another issue that was in the public domain a couple of years ago, and you were very much involved, and this is the Canada Lands Company. 

There were a lot of questions in the House of Commons regarding that issue. In that case, it would appear that you did do something and that you were very much involved politically in lobbying Mr. Grant to hire friends of yours to the company, Canada Lands, and also, lobbying Mr. Grant and other officials with Canada Lands to be involved in contracts involving Canada Lands. So you were very much involved politically in Canada Lands.

My question to you, given your activities in Canada Lands, how did you manage to resist the temptation to not be involved in the sponsorship program?

Hon. Alfonso Gagliano: I'm glad that you bring the Canada Lands file and the Jon Grant saga up, because I think, there again, when that happened in the media, I went and explained exactly, never denying .... Yes, there were problems, Canada Lands had some problems. As a matter of fact, I was the minister who called the RCMP on the operation of the military base in St. Hubert and Canada Lands management. After being briefed by Mr. Grant and Mr. (Inaud.) ## , the chairman and president of Canada Lands, that there were some serious problems. After they informed me that they had performed a forensic audit and I discussed it with my deputy, we informed the Commissioner of the RCMP, and we continued discussions. There were problems managing those properties and I suggested, look, if there are problems here, I know a person who has 35 years of managing property, management school, maybe you can use it, and that was the only thing.

What I want to say about Mr. Jon Grant, because he has been coming out lately in the media again on this, is that Mr. Jon Grant complained to the rank and file in the Liberal Party, complained to the Auditor General , complained to the Ethics Commissioner, complained to everybody, except to me, the minister, about what was going on in my office. Every time that he saw me, and he had a lot of occasions, he always was very complimentary and said what good relations he had with me and my office. There is even some correspondence to that effect.

So, please, I think--

Hon. Shawn Murphy: So your evidence is that you weren't involved in the political hanky panky with Canada Lands. Is that your ...?

Hon. Alfonso Gagliano: The only problem that I, as a minister, have in trying to make this case, for a day-and-a-half, and I've been making it in the media too, a minister, like a member of Parliament, receives representation--

Hon. Shawn Murphy: Okay, I think you've answered my question, Mr. Gagliano.
The second point I want to make, Mr. Gagliano, and I invite you to comment on this, and this is going to be this inverse relationship that this committee has with respect to your innocence on the political hanky panky on the sponsorship program and your competence, because you can't have it both ways here. I'll explain: the more innocent you are, as is coming out in the testimony, the more incompetent you appear. 

It's not a complicated case. We have the minister, the deputy, and the sponsorship. Your evidence is--and it's very clear, you're responsible for managing this department--that, "I didn't do anything, and I didn't know anything, so therefore I'm not responsible". But, the bottom line is, you are responsible. You mandated these people, you set up the department, you hired Tremblay, you supervised Guité, you supervised Quail. 

Your evidence would be a lot easier to accept if you said that you didn't really know anything, and you weren't capable to be a minister. There was somebody there to be responsible for the checks and the oversights that weren't there.
What you're setting up, sir, is you're inviting this committee--in fact, you're compelling the committee--to find that you were extremely incompetent. It would be different if there were a sinister plot to keep the facts hidden, or if you were purposely kept in the dark, but do you have any evidence out there on this issue of competence?
Á (1140) 

Mr. Alfonso Gagliano: Again, it seems that the committee goes around. Mr. Chairman, I'm willing to come back next week, if that's what the committee decides, but I think we're going around the same question.

As a minister, I asked the internal audit. Do you call that incompetence or do you call it responsibility? I asked for the internal audit. The internal auditor was brought to me immediately. I didn't wait six months to have the damn report written. He came to me within a few weeks and said, "Minister, there is a problem". I said, "Should I call the police?" "No, there is no criminal evidence. Ask for a 37-point action plan to fix the thing".

I froze the program. I asked the deputy minister to start negotiations with another department, to transfer, and have a distance between the procurement and the thing. That's responsibility. That's what a minister has to do. The minister doesn't have to go down on every corner and say, "You do this and that" because, then, you would accuse me--

Hon. Shawn Murphy: But, Mr. Gagliano--

Mr. Alfonso Gagliano: --of political indifference. You cannot have the cake and eat it, too. You have to make the decision whether the minister should say at the policy level and let the bureaucrats do their job. When he finds something out that is wrong, he takes action.

And I can prove. The Auditor General, as a matter of fact, says that very clear. But, actually, is that really what we want? Do we want to really know what happened? Because I've been telling you what happened and still you don't believe me. So I wonder where we're going.

Mr. Shawn Murphy: But Mr. Gagliano, you want your cake and eat it, too.
Hon. Alfonso Gagliano: No, I don't.

Hon. Shawn Murphy: Everything happened here under your charge. You're the one that hired Tremblay. You're the one that put him in this position.

Hon. Alfonso Gagliano: I didn't hire Tremblay. Tremblay applied for the job through the system. Through the system. Go and check.

Mr. Shawn Murphy: You're job is to supervise him.

Hon. Alfonso Gagliano: I was not the direct supervise--

Hon. Shawn Murphy: Your job was to supervise Quail.

The Chair: Mr. Gagliano, Mr. Murphy has the floor. One minute.

Hon. Shawn Murphy: But you'll agree with me, Mr. Gagliano, all these problems occurred on your watch. You were the minister responsible.

Hon. Alfonso Gagliano: Yes. And when I was aware of, I fixed them. That's what is leadership and responsibility. But if you are looking for a scapegoat--and I think that's what you're trying--you're doing a good job.

Hon. Shawn Murphy: So you don't accept--

Hon. Alfonso Gagliano: No.

Hon. Shawn Murphy: --any responsibility for anything here today?

Hon. Alfonso Gagliano: I said what I did and that's what is my responsibility.

Hon. Shawn Murphy: And your statement is you thought you were a competent minister at the same time?

Hon. Alfonso Gagliano: Yes, I am a competent minister because I acted when I was informed that there was a problem and I fixed it. And the Auditor General recognized it.

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

We'll have Mr. Kenney, Ms. Phinney, Mr. Gauthier, and perhaps Ms. Wasylycia-Leis...oh, and Mr. Tonks. We will not forget Mr. Tonks either.

Mr. Kenney.

Mr. Jason Kenney: Mr. Gagliano, this morning, if I recall correctly, you testified that you attended constituency fund-raising events throughout Quebec, that you spoke at and whatnot. Is that correct?

Hon. Alfonso Gagliano: Yes.

Mr. Jason Kenney: How often would you say you attended the Quebec Liberal Party fund-raising events in Quebec, give or take?

Hon. Alfonso Gagliano: There are 75 ridings in Quebec. Maybe I would attend...I don't pretend to do the 75 ridings, other ministers would have done it, but at least maybe 15, 20 of them. We had three or four regional cocktails, plus a Prime Minister dinner in Montreal, so I would say maybe 20, 25, I don't know.

Mr. Jason Kenney: A year, on average, you would say 20 or 25.

Hon. Alfonso Gagliano: Yes.

Mr. Jason Kenney: And you, as the minister responsible for Quebec and head of the political organization for the federal Liberal Party in Quebec, were an important figure at these events?

Hon. Alfonso Gagliano: If I was, I was there, for example, I was the speaker.

Mr. Jason Kenney: Right.

Hon. Alfonso Gagliano: So I would make a speech and shake everybody's hand and leave.

Mr. Jason Kenney: And so part of that function, you would shake hands, you would meet people who would be there.
Á (1145) 
Hon. Alfonso Gagliano: Yes.

Mr. Jason Kenney: Okay. Well, Mr. Gagliano, yesterday you testified to the following, and I quote, "I said since I was appointed minister in September 1994 I made it very clear that I withdrew myself from any political fund-raising activity". 

Let me requote that for you, sir, "...I withdrew myself from any political fund-raising activity". That's what you testified to yesterday. And today you say that you attended up to 25 fund-raising events a year in Quebec, at which you were the main speaker, sir.

Why are you contradicting yourself? Why can't you get your stories straight?
Hon. Alfonso Gagliano: I'm not contradicting myself. I've been public on this a few weeks now. What I said, I didn't raise money.

Mr. Jason Kenney: No, sir, what you said is I withdrew myself ...

The Chair: Mr. Kenney.

Hon. Alfonso Gagliano: Can I finish? Yesterday I said I believe and we can check the blues that as a minister when I became the first time appointed to the cabinet September 1994, I even consulted the Ethical Commissioner and the member was laughing and I said now as a minister, what is my position in this? The Ethical counsel advised us you shouldn't be involved in any fundraising activity in terms of raising money, in terms of asking people to buy tickets, you shouldn't be associated with that. But as a minister because you also are a member of Parliament elected like all of you do, you are entitled to attend political activities, make speech but definitely I didn't ask anybody to contribute to 

Mr. Jason Kenney: I quote verbatim from the blues yesterday, the official transcript which says, I'm quoting the minister, the former minister "I made it very clear that I withdrew myself from any political fundraising activity".
Now, Mr. Chairman, this is the problem. It's this witness' credibility. He comes to us and tells us that he withdrew from any political fundraising activity and then he ... no it said any political fundraising activity and then he changes his story. Mr. Chairman, this is the witness' testimony so far. (a) That he didn't run his own department. (b) That he became aware of what was happening in the sponsorship program because of the opposition raising questions. (c) That he requested an internal audit which he never read. 

That his testimony yesterday that there was no political interference involved in this contradicting what the current Prime Minister has said, that I do know that clearly there had to be political direction. It is impossible to believe that there was no political direction. Now the former minister contradicts himself about his fundraising activities. Mr. Chairman, how can this witness expect this committee to believe anything he has to say when he's contradicting himself like this constantly?

Hon. Alfonso Gagliano: Well, Mr. Speaker, I repeat again myself. I don't expect this committee to believe me. This committee and most of the ... I don't say the committee because the committee report of them. That it's public knowledge that the majority, we say the majority, but a certain number of members of this committee are being making statements not only in the House but outside the House accusing me of everything like being the master mind. So I don't expect that the gentleman believe me.

Mr. Jason Kenney: Mr. Chairman, I'd like to ask Mr. Gagliano, did he have any regular meetings with Paul Coffin of Coffin Communications?

Hon. Alfonso Gagliano: No and I don't know Mr. Coffin.

Mr. Jason Kenney: You've never met Mr. Coffin. 

Mr. Gagliano, could you tell us, just repeat for us, who were your chiefs of staff or executive ... who ran your ministerial offices during your tenure as Public Works minister?

Hon. Alfonso Gagliano: I believe I already answered that question. It was Mr. Tremblay at the beginning and then Mr. Jean-Marc Barr. 

Mr. Jason Kenney: And who were your special assistants responsible for Quebec during this period?

Hon. Alfonso Gagliano: I believe there were, I had two or three, I believe Mr. Brodeur, Mr. Lessier ... 

Mr. Jason Kenney: Earlier today you testified that it's possible that Mr. Guite met with these individuals in your office more often than they met with you. You also testified that ... you tried to couch this in the ambiguous statement that you know your office received a lot representations from constituents and interest groups and what not. I wasn't aware that Mr. Guite was a constituent or constituted an interest group. But do you have any idea how often your senior ministerial political staff would have met with Mr. Guite or had direct contact with him?
Á (1150) 
Hon. Alfonso Gagliano: No.

Mr. Jason Kenney: Did you trust your senior political staff, your chiefs of staff and your Quebec ministerial assistants? Did you entrust them? Did you have a good working relationship?

Hon. Alfonso Gagliano: Yes, yes.

Mr. Jason Kenney: Would they carry out your wishes? Do you believe that they followed your direction?

Hon. Alfonso Gagliano: Yes within the scope of the law and the rules. 

Mr. Jason Kenney: Would you be surprised if they had engaged in activity repeatedly that you were ... on an important file that you were unaware of, would they have brought you up to date of important communications they had within your purview as a minister?

Hon. Alfonso Gagliano: I had regular meetings with my chief of staff and he would inform me of major files, yes.

Mr. Jason Kenney: Would you be surprised if you learned that Mr. Guité met with senior members of your ministerial office staff on, say, a weekly basis? Would that be surprising to you? 

Hon. Alfonso Gagliano: Like I said yesterday and today, I received, my office received many representations for sponsorship funds--

The Chair: That wasn't the question, Mr. Gagliano.

Hon. Alfonso Gagliano: Well, he's asking...the only reason my staff would have meetings or contacts with Mr. Guité was concerning sponsorship files. I'm saying if we received representation we'd have to transmit it to Mr. Guité and that's where they would have those communications. How many they had, whether in person, whether by telephone, I don't know.

Mr. Jason Kenney: You have no idea if they were...Would you characterize them as frequent or irregular meetings? You said that your staff briefed you on their activities--

Hon. Alfonso Gagliano: On major activities.

Mr. Chairman, Mr. Kenny--

Mr. Jason Kenney: I have asked--

Hon. Alfonso Gagliano: Can I have a point of order?

The Chair: Mr. Kenny, hold it.

Mr. Gagliano, you may have a point of order.

Hon. Alfonso Gagliano: Mr. Kenny, since this morning-and I know Mr. Kenny. I was in the House when he was first elected and I respect him and I know that he's a very good member of Parliament and questioner, but since this morning, he's trying a kind of a...misquotes me very often, and here is one about the political activities which he quoted just before, Mr. Chairman. I would like to quote from the minutes. It says here: 

Hon. Alfonso Gagliano:Like I said before and I repeat again, I was not participating in fund-raising activities except to go and make a speech. The party, they had a financial committee who were organizing the event and I made it clear, not only during the regular period but also during the election campaign that I didn't want to get myself involved in financial matters--who was giving money, because I didn't want to know. When I was sitting at the cabinet table I wanted to make my decision on the merit of the file and not who was giving money to the party. 

That is in the minutes of this committee. 

This gentleman, Mr. Chairman-and I'll be coming back with a letter once we see the minutes of this morning on the other matter because I don't think it's fair to me.

The Chair: As I mentioned to you, Mr. Gagliano, you have every right to communicate to this committee if you feel that the answers are not appropriately stated or need further clarification.

We will have one very brief question from Mr. Kenny to wrap up this session.
Mr. Jason Kenney: I thank you, but before I get to my question I would invite the witness to read his previous answer where he said:

I withdrew myself from any political fund-raising activity.

That is a verbatim quote, Mr. Chairman.

The Chair: There was nothing beyond that? Was that the end of that quote?

Mr. Jason Kenney: That is the end of the quote. He can read it. That is two paragraphs above the one he just quoted.

Mr. Chairman, this is my last question.

The minister claims he had no knowledge or responsibility of what was going on. 

The current Prime Minister doesn't believe him. He says there had to be political responsibility. Obviously, this minister would have been the one involved in that political responsibility. My question is this: Did the minister not create at least an implicit understanding with his senior political staff, including Mr. Tremblay, Jean-Marc Bard, Mr. Brodeur, Mr. Lesieur, that they were to get this done and if it meant bending the rules and working directly with Mr. Guité they were to do it, but to leave a wall of plausible deniability between them and the minister? 
Mr. Chairman, won't the witness admit that he had his political staff do the dirty work so that he could come to a committee like this and exercise plausible deniability about his knowledge?

Hon. Alfonso Gagliano: Mr. Chairman, again, Mr. Kenny is not looking to find the truth. He's just looking for a scapegoat. 

Yesterday I explained that in my office we had a special assistant and you asked for the name and we said yes, we were going to find out at the different stages we were that we had a special assistant that would communicate with my executive assistant, with the director's executive, on the representation of the sponsorship file. That's all from the minutes. 

Now this morning he asked me who were my political assistants, my assistants for Quebec and I gave the name. I want to put on the record that those gentlemen had nothing to do with the sponsorship file, so therefore, let's not...

But again, I don't think he's interested in the truth. He's just interested in making allegations and accusations and I think that is very clear and the minutes, Mr. 
Chairman, will prove it.
Á (1155) 
The Chair: 


We are going to have a five minute health break and so the committee is recessed for five minutes.

The Chair: 
We'll go Ms. Phinney, Mr. Gauthier, Ms. Wasylycia-Leis if she is here, and so on. 
But before we go to Ms. Phinney, Mr. Gagliano, I couldn't quite get what appeared to be a very, very fine line between speaking at fundraisers but you weren't involved in fundraising.

And what did the Ethics Counsellor actually tell you? Is it that speaking at a fundraising event is not fundraising? Did he tell you that?

Ms. Beth Phinney: Yes, that's the rules. 

Hon. Alfonso Gagliano: He told me--I can't recall exactly, back in 1994--that yes, as a member of Parliament, as an elected politician, it was part of my job to be present and make speeches, shake hands at a political fundraiser, but it was not proper to raise money. In other words, ask people, "Could you contribute $100" or sell a ticket for that activity was not proper. And since then, I have completely withdrawn myself for those activities except, like I said, participating as a minister, as a member of Parliament at riding activities or other regional functions. 

The Chair: So was this a general guideline that the Ethics Commissioner gave to you?

Hon. Alfonso Gagliano: I got that information verbally--

The Chair: Verbally. 

Hon. Alfonso Gagliano: Yes, I called him and I asked. I don't remember, maybe he followed up. I don't remember if he followed up in writing but it was an advice. 

I was just being appointed Secretary of State of Parliamentary Affairs and I felt that I needed to have some guidance on that. 

The Chair: So the Ethics Commissioner didn't say, "I have a general rule and guideline for ministers of the crown regarding fundraising. Here is a general guideline"? He just--

Hon. Alfonso Gagliano: I don't think he pointed me to a general guideline or general rules that were in the guidelines that ministers and secretaries of state were receiving at that time. 

The Chair: So if I can understand you, the Ethics Commissioner said, "It's perfectly okay for you to speak at a fundraiser"--

Hon. Alfonso Gagliano: Yes. 

The Chair: --provided you didn't say, "And please give me money". As long as you didn't use these words or words to that effect, that you were not fundraising?

Hon. Alfonso Gagliano: Well, it's not just the words. As long as you don't ask people for money, as long as you don't really get involved of raising the money directly, I mean, you know, you can make a speech about the--

The Chair: Yes, I'm trying, you know--

Hon. Alfonso Gagliano: --policy of the party of the government. You can be present at the event but you cannot actually be active on selling tickets for the event or taking the phone or knocking at doors and saying, "Here, buy a ticket; give me a $100 for the party". That's what I understood. 

The Chair: These nuances draw to mind some quotations by a former president of the United States but we'll leave that one alone, but it seems to be very close to the same concept-- 

Mr. John O'Reilly: Was it John Kennedy?

The Chair: --and it's okay to speak at a fundraiser provided you don't ask for the money and that is not fundraising, but being at the fundraiser, speaking at the fundraiser, being the principal speaker at the fundraiser is not fundraising and the Ethics Commissioner said that was okay?

Mr. Alfonso Gagliano: Yes. 

The Chair: Okay. 

Hon. Alfonso Gagliano: I assume all of you are doing the same thing in your riding. 

The Chair: We're not ministers, by the way.

Ms. Phinney, eight minutes. 

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

This is not a question but I just would like to give a chance for Mr. Gagliano to sort of set the record straight in something that I have found a little confusing in the last two days. 

When I asked you if Mr. Guité came to your office--when I asked you yesterday--you answered that most of the time when he came he was coming to prepare for the Treasury Board. The rest of the time when you were asked that--the other times yesterday, and I don't know if there was one this morning--you said that you met with Mr. Guité three or four times. 

I just wondered if you could, not today, but maybe send us a note and reflect on that and see if it weren't maybe more than three or four times because you wouldn't have said "most of the time" for three times. If you only did something three times, you don't say "most of those three times I did this". So it might have been seven or eight times, or 15 times a year or once a month. Just, maybe if you could just clarify that in the record because it doesn't balance.

Hon. Alfonso Gagliano: I can do it right away. For over a month I have been trying to recall and see how many times I would meet Mr. Guité. Unfortunately, I don't have... I couldn't find any more my agendas so I couldn't count the times. 

My recollection is three or four times a year. I mean, we went to Treasury Board not more than twice. Definitely there are other matters like the 1-800-OCANADA or the website of the government, other files there, special projects which I talked this morning. So on average, four or five years; maybe a year more, maybe a year less. But again, definitely if I feel in the next few days that I can remember, definitely I'll communicate with the committee clerk any clarification that I, with the...

Ms. Beth Phinney: Thank you. 

Hon. Alfonso Gagliano: If more comes, I will read all the blues. 

Ms. Beth Phinney: Thank you very much.

You were asked by Mr. MacKay yesterday whether you had been briefed when you first came to the department about this program and you said yes, you were briefed. I'm just wondering when you were briefed if it seemed strange to you and you said yesterday when you were talking to me, answering my questions, that you were aware there was a public works department and this little block on the side that was running the sponsorship program? 

Did you at any time think that was a little strange that there was a little group of 14 people who were totally responsible and didn't have to go through any other sections of the department, that they were totally on their own and the communication was between the director there and yourself and I guess Treasury Board, but that there was nothing inside the department, that nobody else in the department was aware of what was going on in there or how it worked? Did you find that at all strange?


Hon. Alfonso Gagliano: First of all, let me say and I think the committee asked for a copy of those briefing books that I received at that time, the briefing I recall clearly in my mind that I was briefed on July 1994. There were new Treasury Board guidelines about the communications service and the opinion research section and that through those guidelines the contracting responsibility for communications service would stay with then called APOR--

Ms. Beth Phinney: We understand that, but did you think it was strange when you saw this outside the box?

Hon. Alfonso Gagliano: No, this is Treasury Board guidelines. When you have Treasury Board guidelines in your mind as a minister you always take very seriously, so....

Ms. Beth Phinney: I can understand that there were guidelines to running this sponsorship program, but I can't understand or don't even know whether Treasury Board would be aware that this box was outside of the department, that there was dealings of a group outside--

Hon. Alfonso Gagliano: At that time it wasn't. As a matter of fact in June, 1997 Mr. Guité was reporting to an assistant deputy minister. When Mr. Guité, it was decided that he would report directly to the deputy minister, it was at the creation of CCSB, because it was created because more responsibility was added, because we had those programs from the privatization of communications group. 

So being more responsibility added and because the importance of a policy government to coordinate all communications' activities in one branch, both felt, the deputy and I, that he should report directly and that would have given the opportunity to be present at the executive committee meetings of the department and therefore I think...felt at that time, not knowing....I mean, if you look at today, what we know today and what we knew then, well, probably I'm sure the same decision wouldn't have been taken, but we were dealing with a situation with the knowledge we had then.

Ms. Beth Phinney: So it was not strange that you were meeting with Mr. Guité and then you approved or disapproved whatever Mr. Guité said and then he took it back to the deputy minister who--

Hon. Alfonso Gagliano: Yes, concerning the Treasury Board submissions.

Ms. Beth Phinney: Yes, it just seemed like backwards. I thought the deputy minister would be the top person, but you okayed it. It didn't have to be run past the deputy minister--

Mr. Alfonso Gagliano: Sure. He had to be--

Ms. Beth Phinney: He has to write out the forms.

Hon. Alfonso Gagliano: Yes, he had to prepare the submission and if the submission would have said well, minister, I don't recommend you to put this forward to the Treasury Board, I wouldn't have.

Ms. Beth Phinney: So he would have done that?

Hon. Alfonso Gagliano: Yes, sure, every Treasury Board submission that I signed and sent to Treasury Board was recommended by my deputy.

Ms. Beth Phinney: The documents you have before you now were given to us by Mr. Marshall, who is the present deputy minister of public works. The first page shows what is the typical procurement process in public works; and if you look at the second page--you can come put them side by side--you'll see how it worked under the sponsorship program.

Do you agree that this is how it worked? Where the steps of going to the procurement strategy, the solicitation, the evaluation, the contract approval, were all totally missed and it just went from Mr. Guité to Mr. Guité, I guess?

Hon. Alfonso Gagliano: Definitely, through the auditor general's report and even some of it in the internal audit, we know that guidelines were not followed to the letter and the spirit.

Ms. Beth Phinney: Do you agree that this was how it was functioning?

Hon. Alfonso Gagliano: You mean from what we know now? Yes, but not then because if you look at the policy and the instruction that they received from the deputy minister, from the Treasury Board guidelines, from the Public Administration Act, even though Treasury Board guidelines said that the procurement operations for communications were to stay with the board but said "you have to respect the rules".

You've had a lot of discussion in the past weeks aboutc schedule Q I believe, there was a requirement. The Prime Minister then asked to make sure you have that because of communication, that special--if you want exemption that communication would have a procurement in their own shop and not like the others but every three months you have to report to Treasury Board, an analysis, of what you did, what contracts, how the contracts were competitive.
I think I saw at least one report, in 1995 or 1996, where Treasury Board accepted a quarterly report could be waived and just keep the annual report.

If you look at those reports, it was clear, Treasury Board agreed that that three months request should have been so things were done properly.
Ms. Beth Phinney: So you're saying that the instructions were from Treasury Board that the sponsorship program did not have to follow this procedure?

Hon. Alfonso Gagliano: The the Treasury Board guidelines in 1994 were such that the communications procurement remain with the communication services group.

Ms. Beth Phinney: That covered all the sponsorship program?

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

Hon. Alfonso Gagliano: In 1994--

The Chair: A couple of announcements, the blues up to 10:45 a.m. are now, I believe, available, and again I would like to congratulate the staff for their excellent efficiency in being able to do that.

I have been given Elections Canada on-line the contributions and expenses for Mr. Alfonso Gagliano for--which election is this? For the 1997 election and also for the 2000 election, the contributions and expenses data base, and that is available in both official languages. Copies will be circulated as soon as possible.

In there, Mr. Gagliano, there is a contribution from GroupAction of $3000. I think it was in the 1997 election that you received $3000 from GroupAction. Do you remember getting that $3000?

Hon. Alfonso Gagliano: If it's in the report, yes.

In 1997, I would like to remind you, I was just Minister of Labour.

The Chair: I'm sorry, you were just--

Hon. Alfonso Gagliano: Minister of Labour, and not Minister of Public Works and Government Services.

The Chair: Okay, but it's in there as a $3000 contribution from GroupAction along with others. These documents are now available.
Monsieur Gauthier, s'il vous plaît, huit minutes.

M. Michel Gauthier: Merci, monsieur le président. Monsieur Gagliano, vous avez dit, j'en ai été témoin, que vous souhaitiez blanchir votre nom, laver cette histoire, mettre cela derrière vous. Vous avez été interrogé tout à l'heure par les députés sur vos rapports d'entrées de fonds électoraux, vos rapports de revenus.
J'ai juste une petite question là-dessus, après on ira sur d'autre chose. La question que je vous poserais est la suivante. Est-ce que vous accepteriez, dans le souci de vous blanchir, de rendre également public le contenu quant aux donateurs de la société qu'on appelle 2812801, Les amis d'Alfonso Gagliano incorporée? Est-ce que vous accepteriez d'aller jusqu'à rendre publics les dons qui ont été faits dans ce cadre pour appuyer votre cheminement en politique, afin qu'on puisse avoir le coeur net quant à la participation éventuelle de personnes, d'agences de communication qui sont impliquées directement dans ce scandale?

L'hon. Alfonso Gagliano: Oui, certainement. Je me souviens très bien que ce groupe a été créé par des amis. Je pense qu'il a servi à deux occasions, soit une fois lors de mon 10e anniversaire comme député et l'autre fois lors de ma nomination comme candidat à la convention.

M. Michel Gauthier: Ça va.

L'hon. Alfonso Gagliano: Je vais voir ce qui existe comme document. Si c'est une compagnie incorporée, donc le rapport a été fait. Il me fera plaisir de vous les obtenir.

M. Michel Gauthier: L'essentiel de mes questions, monsieur Gagliano, porterait plutôt sur une chose un peu particulière. D'abord, la délégation de pouvoir de Chuck Guité pouvait aller jusqu'à combien? De combien d'argent il pouvait décider sans en parler à personne?
L'hon. Alfonso Gagliano: J'avais délégué le sous-ministre et au sous-ministre déléguer à ses sous-ministres adjoints et ses directeurs généraux. Alors, je ne voudrais pas vous donner de mauvais chiffres. Mais je pense que tout cela pourrait être vérifié parce que c'est documenté. Le ministère des Travaux publics a ses dossiers pour déterminer quelle était sa délégation de pouvoir. Mais de mémoire, et encore là, je crois que c'était de 5 millions de dollars, comme directeur général, mais...

M. Michel Gauthier: Sous réserves.

Monsieur Gagliano, c'est à peu près l'ordre de grandeur que j'imaginais, compte tenu de la littérature existante. Mais à un moment donné, tu regardes la liste des commandites et tu vois qu'il y a des panneaux " Canada " et des chandails " Canada ", des soutiens des évènements pour afficher. On comprend le système. À un moment donné, on dirait que le programme prend une orientation différente. En effet, le programme dans la série Maurice Richard devient une espèce de programme de commandite de prestige. Ce n'est plus le mot " Canada " partout qui importe, c'est d'avoir contribué à la réalisation d'une série sur Maurice Richard, avec la compagnie de Robert-Guy Scully, en 1998, et la participation fédérale était au montant de 7,5 millions de dollars. 

Monsieur Gagliano, est-ce que c'est M. Guité qui a pris la décision d'orienter nouvellement ce programme-là et d'aller dans la commandite de prestige ou si, comme c'était une orientation, cela relevait de vous?

L'hon. Alfonso Gagliano: Comme orientation, j'étais informé que la stratégie c'était de présenter un grand Canadien, un personnage bien connu et très apprécié par non seulement les Québécois mais par tous les Canadiens. Donc, on m'avait informé qu'il y aurait des commandites dans ce projet avec soit la Fondation ou la famille Maurice Richard. Je ne m'en souviens pas, mais je n'ai pas été informé des détails.

M. Michel Gauthier: On vous avait informé, c'est donc dire que la décision avait été prise ailleurs. Elle avait été prise par M. Guité.

L'hon. Alfonso Gagliano: Par M. Guité.

M. Michel Gauthier: Déjà, d'engager le gouvernement pour 7,5 millions de dollars, il faudrait vérifier quelle était sa marche de manoeuvre. Moi aussi, j'avais l'impression que c'était 5 millions de dollars. Si c'était le cas...

L'hon. Alfonso Gagliano: Moi j'ai appris que c'était 7,5 millions de dollars lors de la visite de la vérificatrice générale à Copenhague, le 15 septembre.

M. Michel Gauthier: Le montage financier pour subventionner la série Maurice Richard est assez particulier. Il est tellement particulier qu'il y a deux présidents de sociétés d'État qui ont été suspendus suite à la mise à jour de ce montage-là. 

Pouvez-nous dire qui a conçu le montage financier de la série Maurice Richard?

L'hon. Alfonso Gagliano: Lorsque j'ai pris connaissance, par la vérificatrice générale, en septembre, j'étais un peu surpris moi-même. Je pense que vous avez une bonne question et c'est la question qu'il faut poser. Moi définitivement, la première fois que j'ai appris qu'il y avait un tel montage financier, c'était le 8 septembre 2003.

M. Michel Gauthier: Comme ministre des Travaux publics, voilà que vous annoncez le plus gros projet du Programme des commandites, dont vous avez la responsabilité, qui vous tient à coeur, vous l'avez dit hier, il n'y a pas de gène là-dedans, à des fins politiques. Vous aviez un objectif. Vous êtes mandaté par le premier ministre. Vous tenez les cordes du programme et voilà que vous prenez la décision de donner la plus grosse commandite dans une manière un peu spéciale. Ce n'était pas le même type de visibilité. 
Je comprends que vous n'êtes peut-être pas à la fine pointe des détails de financement, mais j'ai un peu de misère à comprendre que le ministre responsable du programme dans une aussi grosse décision, qui excède la capacité du fonctionnaire, d'ailleurs, de décider que vous n'ayez pas entendu parler de cela du tout et qu'on vous l'ait appris lorsque vous étiez au Danemark.

L'hon. Alfonso Gagliano: 
Comme je vous l'ai dit tout à l'heure, dès le début j'ai été informé qu'on participait à une commandite de Maurice Richard mais pas de cette grandeur, ni disons de ce qu'on faisait exactement. Si vous voyez dans le document que vous avez, dans la soumission qu'on a présentée devant le Conseil du Trésor et qui a été approuvée, il y a des montants mais ces montants ne correspondent jamais à un montant comme cela, je crois, de 7,5 millions.
M. Michel Gauthier: Monsieur Gagliano, les société d'État, ViaRail, Postes Canada, dépendaient, je pense, du ministère des Travaux publics, si je me souviens bien.

L'hon. Alfonso Gagliano: Pas ViaRail, non.

M. Michel Gauthier: D'accord. ViaRail c'est le transport. Monsieur Gagliano, ce que je voudrais savoir c'est ceci. Trouvez-vous que cela a un peu de sens? 
Chuck Guité est un fonctionnaire intermédiaire, pas une fonctionnaire supérieur, pas un sous-ministre, il a presque rang de sous-ministre, enfin il a un statut bien bizarre. Il prend le téléphone et appelle André Ouellet qui est un ancien ministre, président de Postes Canada. Il dit: "Écoutes, mon André, tu vas mettre deux millions dans l'affaire de Maurice Richard", et qu'André Ouellet répond: "Oui, mon cher Chuck, il n'y a pas de problème. Je m'exécute de ce pas", tellement qu'après cela il a été suspendu. 

Moi, je me pose la question. Ne trouvez-vous pas que c'est donner beaucoup de pouvoir à Chuck Guité? Personnellement, j'ai de la misère à penser que le président d'une société d'État n'a pas reçu un coup de fil de son ministre de tutelle pour lui dire: "Écoutes bien, mon André, il faut que tu nous aides à nous financer."
Le président: Quelle est votre question, monsieur Gauthier?
M. Michel Gauthier: Elle est posée ma question, monsieur le président. J'explique à mon ami, M. Gagliano.
The Chair: 
Okay. I think Mr. Gagliano has the drift of the question, so we'll have the answer.
L'hon. Alfonso Gagliano: Monsieur Gauthier, je n'ai pas discuté avec M. Ouellet de ce dossier. Comme je l'ai dit hier, je n'ai pas discuté des commandites avec les présidents des sociétés dont j'étais responsable. Et comment j'ai lu dans le rapport de la vérificatrice générale que justement il y avait le projet sur Maurice Richard et un autre projet, mais ce sont des choses que j'ai appris à ce moment-là. M. GauthierGuité était bien connu dans le milieu de la publicité. 
The Chair: Thank you very much, Mr. Gagliano.
L'hon. Alfonso Gagliano: Donc il avait ses façons d'entrer partout.

The Chair: I'm not going to make a comment there.

Ms. Wasylycia-Leis, eight minutes please.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

You will notice, Mr. Gagliano, that committee members are getting a little impatient and frustrated with the lack of answers.

Hon. Alfonso Gagliano: So am I, with your questions. 

Ms. Judy Wasylycia-Leis: Yesterday I said, and I'll repeat it again today as my other colleagues have done, you really are playing us for fools, ignoring the fact that many of us have had long time experience as parliamentarians--some of us have had experience as ministers of the crown--where we certainly have a notion of ministerial responsibility that is quite different from yours.

We need to try to get some answers, as the Chair has said, in the interest of democracy. Mr. Mills may not agree with that, but in fact we are talking about people's loss of faith in politicians and in democratic institutions because of a glut of corruption on the scene currently. I really would like to get some answers.

I'm saying it's getting more serious because, in fact, we're not just talking about a scandal that is centred in Quebec. We're talking about something that actually was starting to fester and spread across Canada.

I want to reference, in fact, new information we have just received--and it's been released in Winnipeg about an hour ago--pertaining to the PanAm games. I asked you about that yesterday. I want to ask you again because, in fact, we know that a sponsorship grant was provided for the games to the tune of $2.336 million. We now know from documents from the PanAm game officials that only $634,000 was for coming to the games. That's a shortfall of $1.7 million.

Mr. Mills would like us to believe that's all production costs. Give me a break. I think that even Mr. Gagliano would question the ludicrousness of Mr. Mills' statement.

We know, in fact, that....

The Chair: We will not have comments across the floor.

Ms. Judy Wasylycia-Leis: All right, I won't.

We also know that this money was....

Mr. Dennis Mills: A point of order, Mr. Chair.

The Chair: We have a point of order. On a point of order, Mr. Mills.

Mr. Dennis Mills: Mr. Chair, the Auditor General of Canada sat here yesterday--

Ms. Judy Wasylycia-Leis: Oh, come on. Let me finish.

Mr. Dennis Mills: --and said that she could not ascertain the amount of value in the $84 million that was directly related to production costs on the 2000 events. And so you should not be casting aspersions until you have the facts.

The Chair: 
Okay, thank you very much, Mr. Mills.

Ms. Wasylycia-Leis, you have the floor.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

Nobody is casting aspersions. We're pointing out the facts and here we're talking about $1.7 million that has gone missing and can't be accounted for. This is money, the sum total, went to a firm by the name of Compass Communications, Inc. of Halifax. And that company is owned by Liberal strategist Tony Blom who is a key Liberal activist in the Province of Nova Scotia. 

Mr. Gagliano, could you tell us, since this happened in your time, why it happened?

Hon. Alfonso Gagliano: I have really no idea. I mean, I know that Mr. Martin, your colleague, the NDP member, raised it, I believe, through the media or the House last week. And this is the kind of problem that I hope the inquiry will address exactly. And I said yesterday, we know to whom the money was paid, to agencies, what we pay them for, but now we find out that the organizations are not receiving the amounts. Definitely the way you present the case, $2.3 million to $634,000, there is $1.7 million. So we have to know what happened to the $1.7 million.

Ms. Judy Wasylycia-Leis: Well I'm glad, Mr. Gagliano, that you've at least acknowledged the significance of this gap and I appreciate that.

Hon. Alfonso Gagliano: Definitely, I mean, it seems that there are other cases similar to this--

Ms. Judy Wasylycia-Leis: However, let me say, Mr. Gagliano, that you were the minister responsible for your department. You also had responsibility for Media IDA Vision getting that contract for agency of record. It turns out that the invoices for this Pan Am Games were sent to Media IDA Vision. So my question is did you know that Compass Communications, Inc. is a part of Media IDA Vision or is this an indication that perhaps there was skimming two and three times over by the way in which these companies were set up and established?

Hon. Alfonso Gagliano: I don't know the relationship between Media IDA Vision and Compass Communications, Inc. I mean, I don't know, definitely I don't know Compass. 

What I can say, that I knew, the way the system was set up, was that contracts for sponsorship above 25% were given to the agency of record. In other words, we're paying through the agency of record and the agency of record had the responsibility and that's why you see the 3% and the 12%. The agency of record had the responsibility and they were paying the other agency that was supposed to deliver the sponsorship. So that's the only relationship that I would understand that there is between Compass and Media IDA Vision.

Now if there is a corporate relationship, I am not aware.

Ms. Judy Wasylycia-Leis: You would agree that it's fishy and we need to get to the bottom of it, generally?

Hon. Alfonso Gagliano: Let's be careful here. There is a system in place that says contracts above, I believe--and I can be corrected--$25,000--

Ms. Judy Wasylycia-Leis: Yes, I heard that.

Hon. Alfonso Gagliano: --the CBC would deal directly with the communication agency. Above that we would go through this agency of record. So I'm saying that the only relationship I see, because the cheque was through Media IDA Vision, but not through Compass, is maybe it's that. But if there's other things, let's find out.

Ms. Judy Wasylycia-Leis: Okay, right. Yes, fair enough. Okay, I appreciate that.
But, on this particular issue, I mean, we're now talking about examples that are happening across Canada. We can fairly say that the whole country has been contaminated by this sponsorship scandal. So my question to you is, in the past you have said, and other have said, that this was necessary because of the crisis in national unity. And Mr. Guité has said that it was worth breaking the rules because of the crisis happening in this country. But, yet we're now finding that, in fact, this is something that was a way of doing business well before the referendum, we know that from Mr. Cutler's testimony, and now we know that this is pervasive across Canada, not limited to the Province of Quebec. So is it fair to say that national unity had nothing to do with the sponsorship file or with the fact that rules were broken and liberties were taken?

Hon. Alfonso Gagliano: No, I don't agree with you on that. I mean, there are three things that I would like to make a point on here. First of all, the sponsorship program was a national program. Anything that the federal government creates is a national program, except the regional agencies, there are specifics for that region. So, yes, the majority, I would say, at least in my time--from 80%-85% or some years maybe even 90%, and the records are there to give you that--was spent in Quebec because that's where the urgent need was. But there were projects that were accepted as well, the Blue Nose, the Pan Am Games, that were in Vancouver, that were in Toronto and there were other activities. So I would clarify that. 

So therefore this was a national program, but definitely we spent the majority of the money in Quebec because there was a national unity crisis.

The Chair: Okay. Ms. Wasylycia-Leis, you can have a very brief follow up question.

Ms. Judy Wasylycia-Leis: Mr. Gagliano, throughout this you've been playing the innocent and don't seem to have much information on the questions we're raising.
Is it possible that you're worried about saying too much because in fact you might feed this perception within your own Liberal organization of being the scapegoat for this whole fiasco and would you say that a lot of people, from the Prime Minister on down, would benefit greatly by making you the scapegoat for this fiasco?

Hon. Alfonso Gagliano: Let's try to answer this in a very simple way. I have already said on the record that I'm not protecting anybody here.

I came before the committee voluntarily and eager to answer all your questions. You might not like my answers but I answer the questions to the best of my ability.

The Chair: Okay, thank you, Mr. Guité.

Some hon. members: Oh, oh!

The Chair: Oh, okay. I do apologize to the witness. That was a Freudian slip.

Hon. Alfonso Gagliano: You need a trip to Arizona.

Mr. Dennis Mills: Mr. Chair, I want to raise a point that is, I believe, pertinent. I put forward a motion at the last meeting to deal with these production costs.
It is very pertinent because Ms. Wasylycia-Leis talked about the Pan Am Games. The fact of the matter is that there was a 10,000 square foot exhibit celebrating the ingenuity of Canadians that was part of the Pan Am Games.

The Chair: Mr. Mills, I thought you wanted a question or whatever but as far as a motion regarding the production of these documents are concerned, we cannot deal with motions today because we are in a break week.

Mr. Dennis Mills: I hear you.

The Chair: That will be on the agenda for Tuesday when the committee is back and motions can be entertained and adopted or rejected.

Mr. Dennis Mills: But, Mr. Chair, I'm trying to illustrate to you, in a very specific and concrete way, why those production numbers are important because we had a member of Parliament today talk about the Pan Am Games and she did not bring into the facts that there was a 10,000 square foot exhibit celebrating the ingenuity of Canadians that was part of the Pan Am Games.

The Chair: That is very well, Mr. Mills, but Mr. Minto from the Auditor General's office also pointed out that when he was asked if value was given for the $150,000 commission, he said, "Well, they maybe did pay for a 48¢ stamp."

So, we have accusations on both sides so we'll just leave it there and we'll get the 

Mr. Dennis Mills: I thought you cared about the facts.

The Chair: I do care about the facts but arguments back and forth--

Mr. Dennis Mills: You're casting aspersions before you get them.

The Chair: Debate across the table is not going to bring facts forward. Mr. Tonks has been waiting diligently all morning so we will recognize Mr. Tonks for eight minutes.

Mr. Alan Tonks: Mr. Gagliano, I think that the frustration is on two counts. I don't think the contention is that when you took action that those actions were incorrect. 

I think that we would agree that as a result of the audit the actions you took were correct.

But I think the contention is that there may have been opportunities for you to have acted and it's with this committee to decide whether it was the system that in fact let you down perhaps, that you didn't get the information to carry out your ministerial oversight.

My questions are going to relate to your testimony. I am going to use your document, if I may.

On page 7, if you could just clarify, it says you inherited the communications program. You said that by "decision of Treasury Board the program between '94 and '96 was reviewed twice." Are you referring to the two audits that were done?
Hon. Alfonso Gagliano: Sorry, I'm referring to the Treasury Board submissions.

Mr. Alan Tonks: The two Treasury Board submissions. Oh, okay, all right.
You also said that included were a list of venues which pretty well reflects what the Auditor General had found deficient in her most recent report. Could you please explain that.

Hon. Alfonso Gagliano: In that Treasury Board submission of '96 you see a list of events that the Treasury Board approved. The Auditor General refers in her report to some of those events.

Mr. Alan Tonks: And did anyone at that time know there was any deficiency?

Hon. Alfonso Gagliano: No.

Mr. Alan Tonks: They were just a list of events. Okay.

Hon. Alfonso Gagliano: I'm saying referring to the Auditor General's report.

Mr. Alan Tonks: All right. On the next page you say:
Upon my arrival I reviewed, and followed the recommendations of the Secretary of the Treasury Board. These included the re-direction of the procurement process.

Now remember, this is on the heels of an internal and an external audit, the one that Ernst Young did. 

Could you please explain to the committee what were the recommendations?

Hon. Alfonso Gagliano: The recommendations that I'm referring to were the new Treasury Board guidelines adopted, and that's what you will find on the briefing notes that I got in June, 1997. There were in July, 1994 new Treasury Board guidelines concerning communication service, and an opinion research, and those guidelines confirm, or I don't know if it was at that time, or even before, that 1994 the procurement functions of communications service should be with the communication service, and the public opinion research branch. So what I'm saying is that I--

Mr. Alan Tonks: We're aware of that.

Hon. Alfonso Gagliano: I was briefed that those guidelines were there since 1994, and they were being implemented, and they were reporting procedures, and so on, and so on, which you have documents, and are aware. So I'm referring to that.

Mr. Alan Tonks: All right. And you said you reviewed those. So you were aware--

Hon. Alfonso Gagliano: Yes, I was aware, and that's why when we created CCSB later in the fall, we created CCSB because we added other functions. That was there. So we took APOR, and we added those functions, we made it bigger, and we changed the name.

Mr. Alan Tonks: But I take it, Mr. Gagliano, that what you reviewed was also a culmination of some of the deficiencies that had occurred in the program when it was under the APORS, and under Mr. Guité.

Hon. Alfonso Gagliano: And now I learn in the past few weeks, through the committee, through Mr. Cutler's testimony, through the Ernst Young audit, and the internal audit, but at that time when I took over the Department of Public Works in June 1997, and in the fall of 1997 I was not aware of those problems.

Mr. Alan Tonks: No, but you said that you followed the recommendations of the Secretary of the Treasury Board.

Hon. Alfonso Gagliano: Treasury Board guidelines. The Treasury Board guidelines--

Mr. Alan Tonks: But those recommendations were based on earlier....

Hon. Alfonso Gagliano: No, because the Treasury Board recommendations, guidelines, that I'm talking were approved in 1994. The internal audit, and the Ernst Young audit and report was done in 1996, which I was not aware. So as far as I'm concerned, I had in front of me Treasury Board guidelines approved in 1994....

Mr. Alan Tonks: Mr. Harder gave a different interpretation of appendix Q. He said that Treasury Board approved the cancellation of appendix Q's reporting requirements to the Treasury. As the document indicates, the secretary concluded because of the high level of competition of public opinion, research, and advertising, the reporting requirements should be removed. PWGCS, however, would continue to monitor the contracts for these services, and ensure the high levels of competition continued.

All right. 

Hon. Alfonso Gagliano: When was that?

Mr. Alan Tonks: That was in September of 1996. 

Hon. Alfonso Gagliano: I was Minister of Labour. I was not briefed on that.

Mr. Alan Tonks: But, Mr. Gagliano, when you took over Public Works you reviewed, and followed the recommendations of the Secretariat, and those were the recommendations.

Hon. Alfonso Gagliano: No, again I repeat. I reviewed the policy guidelines of the Treasury Board, and I'll do myself the research if I can find the briefing notes so that we can use the language.

Mr. Alan Tonks: That would be interesting.

Mr. Chairman, Mr. Gagliano, the next paragraph you say:

In August I signed the submission to Treasury Board to appoint Mr. Guité as the assistant deputy minister.

Now Mr. Guité has gone from APORS through to an EX-2, an EX-3, and now he's an EX-4--

The Chair: Mr. Gagliano....

Mr. Alan Tonks: And if I may, and it was to assist me in my capacity as chair of the cabinet committee.

Now, what was it that you thought Mr. Guité would be so qualified for that you thought that he should be elevated to assistant deputy minister?

Hon. Alfonso Gagliano: Now, the first thing is that I didn't sign a Treasury Board submission to appoint Mr. Guité. If you look at the Treasury Board submission, I signed the Treasury Board submission creating a position called assistant deputy minister for Communication and Coordination. That was the position. The filling of the position was not my responsibility.

Secondly, at the same time, right after the cabinet decided to create the cabinet communication, which I was asked...or right before. I don't remember. I believe it was right before that--

Mr. Alan Tonks: I think this is important.

Hon. Alfonso Gagliano: --submission. Therefore, on the submission, the deputy minister--I assume it was Mr. Guité who prepared the submission--assumed that they would be useful to assist me, as the chairman of the committee, in the secretariat.

Mr. Alan Tonks: But, Mr. Gagliano, the record says here, from Mr. Quail, "He talked to me about this..."--which is Mr. Guité--"...and the minister raised it with me and said he would like the matter looked at, whether or not we could move to have Mr. Guité classified and an EX-4", and then he said later that he signed--

The Chair: Okay, Mr. Tonks.

Mr. Alan Tonks: --he signed the document appointing.
I guess my question is: if you didn't have much of a relationship with Mr. Quail, how did you feel that he was so qualified to be an assistant deputy minister?

Hon. Alfonso Gagliano: No, no, I think you meant Guité. I had good relations with Mr. Quail.

Mr. Alan Tonks: Sorry, Mr. Guité, yes.

Hon. Alfonso Gagliano: Well, like I said yesterday, I had no reason to believe. He was a good gentleman. He was working very hard. He was delivering the objective of the program. I had no reason at that time.

But what I'm saying here is--

The Chair: Okay, thank you very much, Mr. Gagliano.

We're coming close to the 1 o'clock adjournment time. I'm going to allow individual single questions for those who have a question.

Ms. Jennings was first. So we'll have M. Desrochers, Mr. O'Reilly and Mr. Kenney.

Mrs. Marlene Jennings: Just very briefly, before I ask my question, when Ms. Wasylycia-Leis was questioning Mr. Gagliano, she stated there was $1.7 million missing from the Pan-Am Games. That's a really serious accusation. So I would ask, through you, Mr. Chair, that Ms. Wasylycia-Leis table whatever documents she has that back up this accusation.

The Chair: A valid request, Mrs. Jennings.

Therefore, Ms. Wasylycia-Leis, you will provide to the clerk the information that you have.

Mrs. Marlene Jennings: Now, my question is: Mr. Gagliano, you've talked about the 1994 Treasury Board guidelines on contracting, which decided that the contracting function remain in the communication services of Public Works. At that point that was APORS, which was headed by Mr. Guité.

You are now aware of the internal audit, 1996, of APORS, which came as a result of Mr. Cutler's allegations of wrong-doing. The results of that or conclusion of that internal audit, which said the allegations were founded and that there should be an external audit, the Ernst & Young external audit, which concluded that the procurement function should not remain in APORS, and that the assistant deputy minister responsible at the time said, "Yes, we will follow that recommendation. 

We will undertake the administrative mechanisms to ensure that procurement is moved out", you, as an accountant, when you learned that procurement function under Treasury Board guideline was in the Communications Branch or services, did that not ring a bell, saying, "H'hm, you know, there should be a complete separation"? Did it not ring a bell, based on your own professional experience before coming into government?
Hon. Alfonso Gagliano: Not at that time. I believe the Treasury Board guidelines were specific, that procedures should be followed. Competitive process and all that was in the guidelines. But I would like to remind you the moment in the audit 2000 I found there were problems, that's what I exactly did: I separated the two.

Mrs. Marlene Jennings: Yes, but the point is the fact that--

The Chair: No, no Madam Jennings, we do have to move around. 
Monsieur Desrochers, s'il vous plait, un question.
Monsieur Desrochers, s'il vous plaît, une question.

M. Odina Desrochers: Oui, monsieur le président, merci beaucoup.
Monsieur Gagliano, vous avez répondu tout à l'heure à mon collègue de Roberval que vous avez été informé après que toutes les tractations ont été faites entre les sociétés d'État. Par contre, j'ai ici une citation du rapport de la vérificatrice générale. Je vais vous la lire.

[...] L'ancien ministre des Travaux publics et des Services gouvernementaux nous a indiqué qu'il savait que le directeur général de la DGSCC avait conclu des transactions avec les sociétés d'État. Le directeur général l'avait informé que cette façon de transférer des fonds entre des entités était acceptable.
Qui dit vrai là-dedans, monsieur Gagliano? Ce sont vos propres propos, dans le rapport de la vérificatrice générale, et dans ce que vous avez dit à mon collègue de Roberval? 

L'hon. Alfonso Gagliano: Oui, oui, ce que j'ai répondu à la question de M. Gauthier...

M. Odina Desrochers: Qui doit-on croire?
The Chair: Before Mr. Gagliano responds, will you give the reference to what ... 

Mr. Gagliano, one minute please.

Mr. Desrochers, will you tell us the page and the document that you're quoting from and the paragraph?
M. Odina Desrochers: Pour une fois, monsieur le président, que nous avons un document dans cette histoire-là, soit celui de la vérificatrice générale, page 11, 3.44. 
Si vous avez lu le rapport trois fois, monsieur Gagliano, vous devez l'avoir lu, ce passage-là.

L'hon. Alfonso Gagliano: Oui, oui, oui.

Le président: Merci beaucoup. 

L'hon. Alfonso Gagliano: La question de M. Gauthier, c'était à savoir si j'avais parlé des commandites avec les dirigeants de la société de la Couronne. Je lui ai répondu que: non, je n'en avais pas parlé. Et je maintiens encore cela.
Ce que le rapport dit:-et la vérificatrice générale m'a posé la question, et vous voyez aussi que, dans les documents du Conseil du Trésor que vous avez et qu'on a signés pour avoir l'argent, il y a des projets qui portent des noms de sociétés de la Couronne-, oui, monsieur Guité m'avait informé que, dans certaines commandites, on faisait une espèce de... Travaux publics en payait une partie, et lorsque c'était l'autre, pour avoir une meilleure visibilité... À ce moment-là, j'avais posé les questions: est-ce que c'est selon les règles, qu'on puisse faire ces choses-là ou transférer de l'argent pour des commandites à la société de la Couronne; est-ce que les règles sont suivies? Et j'ai eu cette assurance de M. Guité.

M. Odina Desrochers: Est-ce que vous avez posé la question à savoir si les agences de publicité avaient leur cote aussi, après chaque sortie des sociétés d'État?

L'hon. Alfonso Gagliano: Non.

Le président: Monsieur Desrochers, merci beaucoup.
Mr. O'Reilly, please.

Mr. John O'Reilly: Thank you very much, Mr. Chairman. I'm worried about those PanAm games, I sang O Canada at them and got a hat and a jacket. I hope it wasn't part of the sponsorship program. 

The Chair: 

Mr. John O'Reilly: No it was less than $50 I think.
In an earlier question, I asked Mr. Gagliano when I talked about his involvement on page nine that he felt there was criminal activity, he wanted to call the police but was told it was administrative. I asked who gave that advice and I was looking for a specific name or names and I didn't get it in my answer to that question.

Hon. Alfonso Gagliano: Excuse me, I was distracted for a moment. Could you repeat ... 

Mr. John O'Reilly: The whole place is distractive. I understand that. 

Hon. Alfonso Gagliano: 

Mr. John O'Reilly: In my earlier question which I indicated in your evidence on page nine, you indicated you thought there was criminal activity, you were going to call the police and then you took advice that it was strictly administrative. I had asked first of all why you didn't take that action but then who gave you the advice? I was looking at a specific answer to who would have given you the advice to change your mind on that?

Hon. Alfonso Gagliano: The internal auditor.

Mr. John O'Reilly: And that ...

Hon. Alfonso Gagliano: I believe it was then and think it still is Mr. Steinberg. Am I right in pronouncing the name, Mr. Chairman?

The Chair: Steinberg, yes, the auditor.

Mr. John O'Reilly: Okay, thank you very much, Mr. Chairman and Mr. Gagliano.

The Chair: Thank you, Mr. O'Reilly.

Mr. Kenney, please.

Mr. Jason Kenney: Mr. Chairman, first, I'm only going to take 20 seconds but do you mind if I do it in three very tight questions that should require very short answers?

The Chair: 

Mr. Jason Kenney: First, Mr. Gagliano, on July 10, 2002 the Globe and Mail quoted you as saying about Chuck Guite that "He was a good civil servant. He served the country." My question is, is that still your view about Mr. Guite? Secondly, are you aware of any direct contact that Mr. Guite may have had during this period with senior personnel in the Prime Minister's office including Jean Pelletier? And, thirdly, who on your staff was responsible for the sponsorship program, who in your ministerial office was responsible for the program?

Hon. Alfonso Gagliano: In my ministerial office, naturally my chief of staff would be responsible and he might have delegated some responsibility--

The Chair: Was it Pierre Tremblay? 

Hon. Alfonso Gagliano: In the beginning, Pierre Tremblay and then Jean-Marc Bard, he might have delegated some responsibility to senior staff and we can try and find some records to give you--

The Chair: Your other two questions were, Mr. Kenney?

Mr. Jason Kenney: Are you aware of any contact between Mr. Guité and any senior officials of the PMO, including Jean Pelletier? 

My other question was do you--

The Chair: We'll get an answer to the first one. Are you aware?

Hon. Alfonso Gagliano: I'm not aware of a meeting between the Prime Minister's Office and Mr. Pelletier or Mr. Guité.

The Chair: Thank you very much.

Mr. Jason Kenney: Do you still hold by your opinion that Mr. Guité was a good civil servant?

Hon. Alfonso Gagliano: I believe at that time--which date did I say that?

Mr. Jason Kenney: July, 2002.

Hon. Alfonso Gagliano: I believe at that time he was a--

The Chair: The question was, do you still believe it?

Hon. Alfonso Gagliano: There was no reason why. I believe in due process.

Mr. Jason Kenney: The question is, is that still your view?

Hon. Alfonso Gagliano: Whether it's my view or not, I'm not going to accuse anybody, until we know the facts.

Sorry, I don't live by those standards.

The Chair: Thank you.

A direct answer is always appreciated.

Mr. Tonks, did you have a question/

Mr. Alan Tonks: Just one last question, Mr. Chairman, and that was to Mr. Gagliano.

Mr. Gagliano, the Treasury Board approved Mr. Guité as an EX-4, but we were told by Mr. Harder that it was not incumbent in the Treasury Board application for there to be a reorganization plan put forward, that that was something the Public Service Commission would deal with. We were also told that it was because of Mr. Guité's increase in responsibilities with respect to the size of the program and so on.

My question is, in retrospect do you believe that at that time and you were responsible for CCSB, do you believe that there ever at any time should have been a performance review, a program review, that that should have been part of the--and I would say in retrospect, there should have been a reorganization plan, not just an elevation of Mr. Guité?

If you had to play over that again, would you have done that?

Hon. Alfonso Gagliano: Knowing what I know today, yes, I would have asked to go through the board. What I knew then is that we had an effective human resource department in the department who were looking into those issues. The Public Service Commission was involved and I believe that Treasury Board was at least consulted, but again, I only participated with the deputy minister in creating the position.

I said from the beginning that I don't appoint. I don't even appoint the deputy minister.
· (1300) 
The Chair: Thank you, Mr. Gagliano, I think we have that answer.

Ms. Wasylycia-Leis, please.

Ms. Judy Wasylycia-Leis: Thank you, Mr. Chairperson.

I have one quick question and I just wanted to say that before we adjourn I just have a point of order, or a point of privilege, if you will permit that.

My question is this, Mr. Gagliano. You said, and I'm going back to the 2000 audit which you started off your report yesterday saying was your initiative. You said you basically only received verbal reports or you got a summary, but yet throughout the two days, I think it was 13 or 14 times you said "I asked whether I should call the police".

Is it possible that on the basis of a verbal report you would feel that strongly about calling the police? Are you sure that you're clear about those details, that in fact, you weren't more knowledgeable than that?

Hon. Alfonso Gagliano: That's what I recall and I also said this morning I checked to make sure that my memory was not failing. I even checked it with my executive assistant that was present at the meeting and he confirmed it.

The Chair: You said you had a point of order or point of privilege that you wished to raise?

Ms. Judy Wasylycia-Leis: Yes, I want to clarify the previous exchange we had in terms of the--

The Chair: No, we're not into clarification of previous--

Ms. Judy Wasylycia-Leis: Not a clarification, a point of privilege.

The Chair: A point of privilege?

Ms. Judy Wasylycia-Leis: I had said during that exchange that I was referencing the gap of $1.7 million in terms of the money that was allocated for the Pan Am Games--

The Chair: That's a point of clarification, I think.

Ms. Judy Wasylycia-Leis: and I repeat--

The Chair: Yes, that's a point of clarification.

Ms. Judy Wasylycia-Leis: My point of privilege is this, Mr. Chairperson, in the heat of the moment I used the word "missing". I would like to apologize for exaggerating my point and I would like to withdraw the use of the word "missing", but I will still provide the documents pertaining to the gap in the money designated for the Pan Am Games and the money that was received by the Pan Am Games.

The Chair: Thank you very much.

No, we're not getting into any points of order. I think we've had enough of these for today. I will just bring this meeting to a close.

Mr. Mills, Ms. Wasylycia-Leis, I said no across-the-floor comments and I'm going to wrap this meeting--

Oh, Mr. Gagliano wants to say something.

Hon. Alfonso Gagliano: On the point of logistics I'm not sure yet. When I was called to come before this committee the information was Thursday and possibly Friday and we have been hearing now through this morning discussion, I hear the possibility of Monday. I would like to know, because I made plans for the next two weeks. I was going outside the country, so if I have to cancel those plans, I would like to know as soon as possible.

So am I back Monday or not?

The Chair: We will absolutely give you all the notice that we can and we, I'm sure, respect any travel commitments that you have made, your offer to be here on Monday. 

Mrs. Jennings.

Mrs. Marlene Jennings: I think that if the committee decides that we are in fact going to call Mr. Gagliano back for this coming Monday, which is the 22nd, then we should inform Mr. Gagliano--

The Chair: Today.

Mrs. Marlene Jennings: --and it should be the decision taken now. Otherwise, if we say no, it's not the 22nd and then we decide on another date and Mr. Gagliano is not available, I fear that opposition members will attempt to read into Mr. Gagliano's unavailability things that are not there in the same way they read into some of his responses, put negative connotations on them.

The Chair: All right.

I was going to have an informal discussion after this meeting and therefore, I think, at that point in time....Do you want to do it on the record? All right.

Before we go to that, I have two points and we'll therefore make a decision.

Ms. Phinney, do you have a point?

Ms. Beth Phinney: I think it might be more helpful and we might have more of an idea if we want to have him back or not if we wait for maybe....What, you're going to be away for two weeks? Two weeks, we have time after that, so we could have him back, say, on the 5th or 6th or 7th or something like that. 

We would have heard other people in the meantime when we could verify things, rather than continue as has already been mentioned today, some of these questions are just being repeated over and over and over again.

The Chair: It is my opinion that if we are going to invite you back, Mr. Gagliano, that it would be after we have heard from other people and that would be when we do it and not just a continuation of the conversations we've had for the last two days.

So if I can speak for the committee, I think I may be speaking for the committee to say we will not be calling you on Monday. You may therefore continue your other commitments, personal commitments that you have and if the committee does call you back, then, of course, advise us if you have commitments that you have made and we will try to respect that if at all possible.
· (1305) 
Hon. Alfonso Gagliano: Thank you very much.

The Chair: Before you leave, I just want to say, Mr. Gagliano, that you mentioned earlier on about the debate about ministerial accountability is what this is all about and yes, it is, but it's about the renewal of ministerial accountability.

I think ministerial accountability has been around at least since Confederation and that ministerial accountability, as far as I always took it to mean, that a minister is accountable for the workings of his department. You have repeatedly and painstakingly went out of your way to ensure that you did not accept that responsibility in the last two days. I find that very unfortunate, but that is your choice.

We will have to discuss these issues as we table a report to the House of Commons. Therefore I would like to finish by thanking you for coming forward for the last two days. We appreciate it and the committee will continue with other witnesses and if we'd like to have you come back, we will communicate with you through the clerk. So I thank you very much.

L'hon. Alfonso Gagliano: Thank you.

The Chair: The meeting is adjourned..

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