PACP Committee Report

The Office of the Correctional Investigator is a small, independent agency that investigates complaints of individual federal offenders. The Correctional Investigator acts as an ombudsman by conducting investigations at the request of the responsible minister or on his own initiative. He tries to resolve them by making recommendations to Correctional Service Canada. The Correctional Investigator is appointed to a term not exceeding five years, which may be renewed. The former Correctional Investigator, Ronald Stewart, held the position for 26 years, from November 1977 to October 2003.

The Office of the Auditor General conducted an audit of the Office of the Correctional Investigator (OCI) because it had received anonymous complaints alleging questionable practices at the OCI. The audit focused on human resources management practices, possible unreported leave, annual leave cash-out, and travel and hospitality expenditures with respect to OCI senior managers and the former Correctional Investigator. The audit also examined some of the financial and human resources services that Public Safety and Emergency Preparedness Canada (PSEPC)^[1] provided to the OCI and two other small independent agencies.

As the Committee was concerned about the breach of the public trust and the breakdown of controls, it held a hearing on the audit of the Office of the Correctional Investigator on 26 March 2007. The Committee heard from Sheila Fraser, Auditor General of Canada; Ron Stewart, the former Correctional Investigator; Howard Sapers, the current Correctional Investigator; Charles-Antoine St-Jean, Comptroller General of Canada; Marc O’Sullivan, Assistant Secretary to the Cabinet, Senior Personnel and Special Projects Secretariat, Privy Council Office; Suzanne Hurtubise, Deputy Minister, Department of Public Safety and Emergency Preparedness Canada.

This is not the first audit of a small organization. The Office of the Auditor General also investigated the Office of the Privacy Commissioner in 2003.^[2] The Public Accounts Committee held three hearings on this audit in October 2003 and issued a report in April 2004. ^[3] This audit found numerous problems with the hospitality and travel expenses of the former Privacy Commissioner, as well as with human resources practices within the Office. The Committee recommended closer monitoring by the Public Service Commission and the Treasury Board Secretariat of small organizations.

The Office of the Auditor General has since created a small entities team to examine the practices of small organizations in more detail. While the amount of public funds involved is small, the potential for a significant breach in the public trust remains large. The Auditor General told the Committee that her office also intends to examine the governance of small organizations, and the resulting report should be tabled in Parliament in 2008. The Committee supports such an audit, since repeated instances of wrongdoing in small organizations suggests general governance problems with the many small organizations.

During the hearing, Mr. Stewart raised questions about the findings and conclusions of the audit. However, when pressed for facts or details that might support him, he appealed to a faulty memory, the failure to keep documents, or the lack of access to documents. The Committee strongly supports the methods of the Office of the Auditor General. The auditors are well-trained, highly professional, and objective. Mr. Stewart was provided ample opportunity to present his case, and he has completely failed to present any supporting evidence. The Committee also supports the subsequent findings, conclusions, and recommendations of the audit, which are measured, appropriate, and fair.

The audit determined that the former Correctional Investigator, Ron Stewart, committed serious abuses and wrongdoing, some of which resulted in substantial personal benefit. According to the audit, the former Correctional Investigator:

• received unearned salary—he was absent for 319 days from OCI premises from 1998-99 to 2003-04 but was paid for that time (as he earned 159 days of annual leave, 162 days were unearned);
• generated little work product in six years, such as reports, memos, letters, notes, e-mails, telephone calls, decisions, or comments;
• improperly cashed out annual leave—he did not report taking any annual leave and thus received cash, even though he took the time off;
• claimed and was reimbursed for non-business travel expenses, such as trips to the Grey Cup;
• claimed and was reimbursed for non-business hospitality expenses, such as entertaining relatives, friends, and acquaintances;
• purchased computer equipment for non-business use; and
• used a government vehicle for personal purposes.

The audit identified improper payments of $198,000 and questionable payments of $127,000, as outlined in the following table (exhibit 11.1 from the audit).

Type of improper payments 1998–99 to 2003–04	Approximate amount
Unearned salary	$83,000
Cash-out of annual leave	$95,000
Non-business travel expenses claimed	$7,000
Non-business hospitality expenses claimed	$5,000
Purchase of computer equipment for non-business use	$8,000
Total improper payments	$198,000
Type of questionable payments 1990–91 to 1997–98
Cash-out of annual leave	$127,000
Total payments	$325,000

The Committee is appalled at this abuse of the public trust. The mere fact that the OCI was a small agency without the capacity of a large organization should not be an excuse to obtain unjustified personal benefit at the expense of the public purse. The Committee strongly believes that the former Correctional Investigator needs to be held to account for his actions by returning to the Crown any improper payments that he received. In his appearance before the Public Accounts Committee, Ron Stewart made such a commitment. He said, “I want to tell this committee and the people of Canada that if I have received money or benefits that I should not have received, I intend to pay them back to the best of my ability. I promise you I will do that.” ^[4]

The Auditor General recommended that a report be submitted to Parliament outlining actions to be taken to identify and recover any money improperly paid out. On 25 October 2007, the Minister of Public Safety provided the Committee with this report, which says the government has recovered a substantial amount of monies identified by the Auditor General as improperly received by the former Correctional Investigator. According to the report, “The repayment of funds includes sums equivalent to: the improper cash-out of annual leave during the audit period; non-business travel expenses claimed; non-business hospitality expenses claimed; and, the purchase of a computer for non-business use. The pre-tax value of this settlement totals $112,000.” Attached to this report was a letter from Ron Stewart to the current Correctional Investigator, Howard Sapers. Mr. Stewart wrote:

At no time did I ever intend to do anything wrong or take actions that could have resulted in personal benefit. I deeply regret any procedures that might have been viewed as inappropriate or misleading. I assure you that I want to do the honourable thing and repay to the people of Canada benefits that I may have received in error. To this end, I have agreed to pay, in full and without question, all money requested by the Government of Canada.

The Committee appreciates Mr. Stewart’s statement of regret and the effort to return funds to the government. However, it notes that Mr. Stewart did not reimburse the entire amount of improper and questionable payments identified by the Auditor General in the table included above. In fact, it appears that Mr. Stewart did not reimburse the government for “unearned salary,” and the “cash-out of annual leave” from 1990–91 to 1997–98. The Committee is concerned that those who abuse the public trust are able to avoid repaying the full amount of what was received inappropriately. As the Committee would like to know why the government made a settlement for less than what was owed, it recommends that:

Recommendation 1

The government provide the Public Accounts Committee with an explanation by 30 June 2008 as to why  it did not seek reiumbursement from Ronald Stewart for unearned salary and the cash-out of annual leave from 1990-1991 to 1997-1998, as identified by the Office of the Auditor General.

The problematic practices at the OCI also extended into human resources. The audit found that a number of human resources practices did not comply with Treasury Board policies and practices, such as:

• within a short period, half of the employees were reclassified or promoted;
• competitions for employment opportunities were neither fair nor open; and
• three executive-level positions were retroactively reclassified and staffed.

In addition, a surplus in the OCI’s appropriation in the years 1999-2000, 2000-01, and 2001-02 was paid to non-management employees as a bonus. OCI officials had to manipulate calculations to ensure that each employee received about the same amount, despite differences in salary scales. According to the audit, these payments contravened the Financial Administration Act.

These practices at the OCI are disturbing in themselves, but what is most troubling is that there seems to have been little in the way of the normal checks and balances to ensure that financial and human resources practices comply with Treasury Board policies, as well as public service values and ethics.

One of the main reasons that the former Correctional Investigator was able to receive improper payments is that there was inadequate checks and balances both within the OCI and by the service provider, PSEPC. Under the Treasury Board Policy on Responsibilities and Organization for Comptrollership, all deputy heads are required to appoint a senior financial officer. The senior financial officer is responsible for ensuring that transactions and payments comply with the Financial Administration Act and are handled with prudence and probity. If the senior financial officer believes that an action of the deputy head is inappropriate, he or she must attempt to persuade the deputy head to follow a different course, and failing that, seek the advice of the Deputy Comptroller General.^[5]

While the Executive Director of the Office of the Correctional Investigator signed for many years as the senior financial officer of the OCI, he believes that this function was performed by an official of PSEPC. It was thus unclear who was assuming the position and functions of senior financial officer at the OCI, and the former Correctional Investigator’s improper expenditures were not challenged. Mr. Sapers told the Committee that the OCI has secured the services of an interim senior financial officer to improve the OCI’s management policies and procedures.

The lack of effective oversight was not just internal to the OCI. As a small agency, the OCI does not have adequate capacity to perform financial management and human resources activities. Consequently, the supervising department, Public Safety and Emergency Preparedness Canada (PSEPC), provided these services to the OCI. Yet, the audit found that officials at PSEPC did not challenge the questionable expenditures or human resources practices, and instead they believed their role was simply to provide services to the OCI. However, as they were authorizing payments on behalf of the OCI under section 33 of the Financial Administration Act, they had a duty to challenge the OCI’s questionable practices.

The current Deputy Minister of PSEPC, Suzanne Hurtubise, was very forthcoming in admitting that her department did not appropriately fulfill its role to check for compliance with the rules and guidelines of the Treasury Board. She also accepted responsibility. She said, “As the accounting officer of the Department of Public Safety, I am responsible for the quality of the services provided by officers of the department to the agencies of the portfolio.”^[6] While she was not the deputy minister at the time of the failure in oversight by her department, Ms. Hurtubise said that her department has developed a work plan to implement the recommendations and fix the problems.

The Committee believes that the OCI and PSEPC are sincere in their desire to improve the oversight of financial management and human resources practices. However, a recent audit of human resources practices at the OCI by the Public Service Commission found that problems continue. Of 10 appointments reviewed, 9 did not comply with the Public Service Employment Act, relevant policies and/or the appointment values. While the OCI had developed a human resources plan and a staffing monitoring model, very little work had been done to implement them. The audit did find that improvements had been made in the challenge function of the service provider, PSEPC.

As the Committee wants to ensure that the OCI and PSEPC make meaningful progress in addressing the problems identified by the Office Auditor General, it would like to have specific, detailed information about what steps these organizations have already taken to improve financial management and human resources practices and what further actions remain, as well as their expected completion date. The Committee recommends that:

Recommendation 2

The Office of the Correctional Investigator and Public Safety and Emergency Preparedness Canada provide detailed action plans to the Public Accounts Committee by 30 June 2008 on how they intend to implement the recommendations of the Auditor General.