PACP Committee Report

It is evident from the problems noted above that officials at the OCI and PSEPC were either unaware or were unclear of what was expected of them; there was confusion over roles and responsibilities. Two central agencies, the Treasury Board Secretariat and the Privy Council Office are responsible for providing general guidance and oversight to departments and agencies. This case and the 2003 audit of the Office of the Privacy Commissioner make it clear that this guidance and oversight is not working.

Treasury Board Secretariat

It is clear that the OCI under the leadership of Ron Stewart did not comply with many Treasury Board policies. Through all of this, the Committee cannot help but wonder where the Treasury Board Secretariat was. Once again, it would appear that the Secretariat believes that it is sufficient to develop and promulgate a policy on senior financial officers, rather than take action to monitor and ensure that all departments and agencies, including small independent agencies, have an adequately trained and qualified senior financial officer who understands that it is his or her duty to ensure that the organization complies with appropriate guidelines and policies. Additionally, departments providing services to small independent organizations need to better understand their duties.

Charles-Antoine St-Jean, the then Comptroller General of Canada, admitted to the Committee that there was a lack of clarity over roles and responsibilities. In his opening statement, he told the Committee that the Treasury Board Secretariat was undertaking a broad review of financial management policies and working to clearly define roles and responsibilities, as well as accountabilities. In its response to a recommendation by the Auditor General to ensure that all small independent organizations have a senior financial officer, the Treasury Board Secretariat noted that it is working on a new Chief Financial Officer Model for the Government of Canada. ^[7] The Committee hopes that the Secretariat is more rigorous in its application of this model than it has been with the current policy on comptrollership. While the Treasury Board Secretariat agreed with the Auditor General’s recommendations to take corrective actions regarding senior financial officers and the roles of service providers, the Committee is concerned that these problems arose in the first place.

What seems to be missing is clarity in the roles and responsibilities of the Treasury Board Secretariat. It needs to take responsibility for ensuring that departments understand and comply with Treasury Board policies. Too often the Secretariat is complicit in creating confusion in roles or permitting the confusion to continue. The Treasury Board Secretariat must bear some responsibility for ensuring that senior financial officers understand and fulfill their roles. Consequently, the Committee recommends that:

RECOMMENDATION 3

The Chief Financial Officer Model include clear roles and responsibilities for the Treasury Board Secretariat to monitor and ensure that chief financial officers understand and fulfill their duties.

As noted earlier, it was not clear who was fulfilling the role of senior financial officer at the Office of the Correctional Investigator. Consequently, in order to ensure that there is absolute clarity of who is the senior financial officer in each organization, the Committee recommends that:

RECOMMENDATION 4

The Treasury Board Secretariat publish on its website by 30 June 2008 a list of all the senior financial officers in the federal government, and keep this list up to date.

The Treasury Board Secretariat maintains that it conducts monitoring activities. The Auditor General recommended that the Treasury Board Secretariat monitor small independent agencies to assess the effectiveness of their management and financial control frameworks, and to ensure they comply with applicable Treasury Board policies and practices.^[8] The Treasury Board Secretariat responded by referring to the Management Accountability Framework (MAF) exercise, whereby the Secretariat sets out management expectations for departments and agencies and then assesses their performance against these expectations. When the Public Accounts Committee criticized the work of Secretariat in 2003 with respect to the Office of the Privacy Commissioner, the Secretariat also referred to the MAF exercise, “To that end, Treasury Board Secretariat is developing mechanisms to annually assess and monitor progress in the achievement of MAF expectations by departments and agencies.” ^[9]

The Office of the Correctional Investigator was not covered for the third or fourth rounds (2005-2006 and 2006-2007) of MAF assessments.^[10] While it may not be possible to conduct MAF assessments of every small organization within the federal government each year, it is not at all clear how regularly these organizations will undergo an assessment. The Committee believes that conducting assessments on an ad hoc and intermittent basis makes it impossible to set baselines, assess progress, and to monitor whether previously identified deficiencies have been corrected. It is not clear whether all small organizational will participate in this process or how often, as there is no published long-term calendar of assessments or standards for frequency. Consequently, the Committee recommends that:

RECOMMENDATION 5

The Treasury Board Secretariat conduct regular Management Accountability Framework assessments of all small organizations and clearly establish the frequency of these assessments on its website.

In addition, while the Treasury Board Secretariat seems to be relying heavily on the MAF process to provide feedback on departmental administration and compliance with Treasury Board policies, it is not clear to the Committee how rigorous or effective these assessments are. As the Committee would like to have greater assurance that the MAF exercise is fulfilling the role placed upon it by the Treasury Board Secretariat, the Auditor General may wish to audit the MAF assessment process.

Another way to detect problems is through internal audits. Serious problems have now occurred in two small agencies, and there could be problems elsewhere. As small departments and agencies do not have the capacity to conduct audits, the Office of the Comptroller (OCG) has the authority to conduct horizontal and other audits of small departments.^[11] The Comptroller General told the Committee that his office is currently undertaking a horizontal audit of travel and hospitality in small departments and agencies. They are also exploring the possibility of conducting an audit of the financial management practices associated with overtime, leave, and taxable benefits.

The Committee is pleased that the OCG is undertaking activities to monitor more closely the activities of small organizations. However, it is not clear what organizations are covered by these horizontal audits and how regular the audits will be. For example, are all 38 independent organizations identified by the Privy Council Office included in the horizontal audit? As the Committee believes that all small organizations should be subject to the scrutiny and review of internal audit, the Committee recommends that:

RECOMMENDATION 6

The Office of the Comptroller General ensure that all small independent organizations are subject to internal audit on such a regular basis as to prevent serious management problems from occurring; that these audits be conducted at least every five years; and that the Treasury Board Secretariat publish a schedule for these audits, including the names of the organizations to be audited, in its report on plans and priorities, beginning with the report for 2009-2010.

Privy Council Office

The Privy Council Office also has a role to play in providing guidance and oversight because the Privy Council Office’s Senior Personnel Secretariat is responsible for Governor in Council appointees, which includes the Correctional Investigator. The Privy Council Office prepares guidance for heads of agencies and advises the prime minister on performance pay, appointments, and re-appointments of Governor in Council appointees.

Marc O’Sullivan, Assistant Secretary to the Cabinet, Privy Council Office, told the Committee that Ron Stewart was first appointed to be Correctional Investigator in 1977 under the Inquiries Act. In 1993, he was reappointed for a five-year term under the Corrections and Conditional Release Act. He was subsequently reappointed for three years in 1998, and for a two-year period in 2001.

The Committee is troubled that the former Correctional Investigator was reappointed several times, even though concerns about his activities go back many years. For example, the audit found that the former Correctional Investigator did not report any annual leave and instead cashed out all of his annual leave from 1990-91 to 1997-98.^[12] The audit also concluded that he was frequently absent from the office and failed to provide effective oversight of the OCI’s operations. In fact, the OCI functioned for years without appropriate management from its agency head. The Committee believes that the Privy Council Office needs to undertake a more thorough process to make sure that those reappointed to head small independent organizations are indeed fulfilling all of their duties appropriately, including their management duties. The Committee recommends that:

RECOMMENDATION 7

The Privy Council Office ensure that all Governor-in-Council appointees to head small organizations are adequately fulfilling their management responsibilities before recommending their reappointment.

In addition to being reappointed several times, the audit noted that the former Correctional Investigator received performance awards in addition to his salary.^[13] Marc O’Sullivan told the Committee that Mr. Stewart did not actually receive performance pay but was given management pay for his management responsibilities. According to Mr. O’Sullivan, case law established that it is problematic for the government to award performance pay to a person holding a quasi-judicial position or a position requiring independence. The management pay is not variable and is half of the maximum performance pay available to someone in a similar non-judicial position.

While the government may not be able to provide performance pay, the Committee is appalled that Mr. Stewart received management pay when his management practices were clearly unacceptable. If performance pay is not an option, then the correct response is to incorporate the performance award into the salary scales, as has been done with other full-time Governor-in-Council appointees identified as requiring independence. ^[14] Renaming the payment “management pay” when it clearly has nothing to do with management and making it automatic is patently absurd. The Committee recommends that:

RECOMMENDATION 8

The Privy Council Office cease the practice of providing quasi-judicial Governor-in-Council appointees management pay, beginning in 2008-2009.

The former Correctional Investigator told the Committee that he did not receive any training for his management responsibilities. The Auditor General confirmed that she also received no training after her appointment. While the Privy Council Office prepares a Guide Book for Heads of Agencies, this is a very passive form of guidance; it presumes that the recipients read, understand, and remember the guidance. In a response to a recommendation by the Auditor General to ensure that Governor in Council appointees are appropriately trained, the Privy Council noted, “The Canada School of Public Service provides formal orientation and training sessions for heads of agencies. It is proposed that such training become mandatory for heads of agencies.” ^[15] As well, agency heads would receive an individual session with Treasury Board Secretariat and Privy Council Office officials.

The concern with inadequate training for the heads of small organizations is not a new problem. The Auditor General told the Committee, “We raised this issue in our audit of the Office of the Privacy Commissioner in 2003. To our knowledge, it has still not been resolved, even though the Public Accounts Committee made a recommendation about the training of Governor in Council appointees in its 2004 report on the audit of the Office of the Privacy Commissioner.”^[16]

The Committee is very dissatisfied that the Privy Council Office is still at the stage of only proposing whether to make training mandatory. More progress should have been made by now. Also, training cannot simply be done at appointment. Standards, policies, and expectations change. As well, after many years in a position, it is likely that people need to have a refresher course. Consequently, training must be continuous, and not a one-time affair. As the Committee would like more than assurances that the Privy Council Office intends to take action, the Committee recommends that:

RECOMMENDATION 9

The Privy Council Office provide the Public Accounts Committee a report by 30 June 2008 on actions taken to ensure that all full-time Governor in Council appointees are appropriately advised and trained.

Providing passive information to appointees does not ensure that they understand the guidance. If appointees were required to sign a statement saying that they had read and understood the guide outlining their roles and responsibilities, the Committee believes that Governor in Council appointees would be more likely to take the guidance seriously and proactively seek out further information and training if needed, which the former Correctional Investigator did not do. Therefore the Committee recommends that:

RECOMMENDATION 10

The Privy Council Office require full-time Governor in Council appointees that head an organization to sign a statement that they have read, understood, and accept their responsibilities as outlined in the Guide Book for Heads of Agencies, and any other relevant guidance documents.

Ultimately, questions over appropriate conduct come down to values and ethics. Clearly, the former Correctional Investigator did not act appropriately. He did not fulfill his responsibilities as head of the organization to provide administrative oversight. He also acted for personal gain and benefit, rather than ethically—with probity and propriety. The tone from the top matters, and the Office Auditor General found morale was very poor at the Office of the Correctional Investigator.

However, this case is not just about the actions of one individual. Many others knew of his actions and did very little, or nothing at all, to prevent them. The Executive Director was the senior financial officer and was aware of many of the inappropriate activities. However, he believed his role was to manage the investigative function of the office and administration was handled by the service provider. Yet, the officials from the service provider, Public Safety and Emergency Preparedness Canada, believed they had no oversight role and thus did not challenge any of the questionable expense claims or human resources practices.

When the head of an organization is engaged in unacceptable practices, it is tempting to look the other way and do nothing, to not rock the boat. However, it was the specific duty of certain individuals within the OCI and PSEPC to challenge the practices of the former Correctional Investigator. Responsibility for what took place at the OCI cannot rest only on one person. While others may not have personally benefited from his actions (though the payment of the OCI’s surplus to employees as a bonus does raise questions), they had a duty to speak out; it is the responsibility of all public servants to take action to prevent the inappropriate use of public funds. The audit was started on the basis an anonymous complaint to the Office of the Auditor General, but by then it was too late. The Committee believes that senior officials at both the OCI and PSEPC must bear some responsibility for the serious abuses and wrongdoings committed by the former Correctional Investigator, as far too many people did nothing while he continued his inappropriate activities for years. The Committee recommends that:

RECOMMENDATION 11

The Office of the Correctional Investigator and Public Safety and Emergency Preparedness Canada examine whether sanctions should apply to those who knew about the inappropriate practices of the former Correctional Investigator but did not take sufficient actions to stop them.

As head of an agency, the former Correctional Investigator, Ron Stewart, had a responsibility to uphold the public trust, to provide administrative oversight to his organization, and to act ethically. Unfortunately, he failed to do so, and instead he used his position for personal benefit. What is equally troubling is that the checks and balances that should have prevented this from happening were not in place. It appears that no one was willing to question or put an end to clearly inappropriate activities. The Office of the Correctional Investigator and the service provider, Public Safety and Emergency Preparedness Canada, have acknowledged that mistakes were made and are taking corrective actions. However, as it is possible that inappropriate activities are taking place in other small organizations, it is the responsibility of the central agencies, the Treasury Board Secretariat and the Privy Council Office, to provide strong oversight and guidance to all government organizations on their roles and responsibilities to ensure that this does not occur elsewhere. The Committee sincerely hopes that these organizations will take their responsibility to provide leadership and direction seriously because until and unless such leadership is in place, it is possible that this could occur elsewhere, which would lead to an unfortunate erosion of public confidence in their government and public service.