HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

Ms. Maureen MacDonald (Chair)

Mr.Chuck Porter (Vice-Chairman)

Mr. Patrick Dunn

Mr. Keith Bain

Mr. Graham Steele

Mr. David Wilson (Sackville-Cobequid)

Mr. Keith Colwell

Mr. Leo Glavine

Ms. Diana Whalen

WITNESSES

Mr. Jacques Lapointe, Auditor General of Nova Scotia

Mr. Alan Horgan, Deputy Auditor General

Ms. Evangeline Colman-Sadd, Assistant Auditor General

In Attendance:

Ms. Kim Leadley

Legislative Committees Office

Mr. Gordon Hebb

Chief Legislative Counsel

HALIFAX, WEDNESDAY, JUNE 11, 2008

STANDING COMMITTEE ON PUBLIC ACCOUNTS

10:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: I'd like to call the public session of the committee to order, please.

At this point we'll have a brief opportunity to hear from the Auditor General and his staff with respect to their interim report on the nominee special audit. There will be, hopefully, an opportunity to ask a few questions. So without any further use of time, I would invite Mr. Lapointe to make some opening comments on the special report and then we will have some brief questions from committee members.

MR. JACQUES LAPOINTE: Thank you, Madam Chair. As you know, the report we're releasing today is a special report on the first phase of our audit of the economic stream of the Office of Immigration's Nominee Program. As you recall, we undertook this audit on a request from this committee last November. While we first thought to complete the audit and report to the House by Spring of this year, the extent of the work is such that it will continue into the early Fall. I therefore decided to present an interim report at this time on the work that has been completed to date. So we'd just like to say thank you for the opportunity to appear before you today and I'd be happy to take your questions.

MADAM CHAIR: Thank you very much. There will be 20 minutes for each caucus.

Mr. Steele.

MR. GRAHAM STEELE: Thank you very much. The first thing I would like to do is to thank the Auditor General and his staff, particularly Ms. Colman-Sadd, who has led a team in a very difficult and complex audit.

We are aware of the fact that this audit was undertaken in response to a request from this committee. We knew that you were under no obligation to do so, but we were quite gratified that your office did undertake the audit because we believe, especially in light of the findings that are being reported today, it was important and necessary that the audit be done.

To a certain extent, your findings simply support what we either knew or suspected already, that is the grave deficiencies in the Nova Scotia Nominee Program, particularly the economic stream. The program had no or weak objectives, the rules were not followed with respect to procurement, and the contract was entirely inadequate to deal with the amount of money involved through the program objectives. There were a number of respects in which there was non-compliance with the federal-provincial agreement on immigration and the process by which mentors were approved or not approved was wholly inadequate.

This is a stunning example of mal-administration on behalf of or by the Nova Scotia Government. I think when Nova Scotians learn the details of the extent of the mal-administration of this program, that they will be shocked, and they should be.

The thing that is new today, I would say, is your complaint in strong language about the restrictions on access to documentation. According to your report, there are documents that you believed you had the right to have, that you thought you needed to have that were relevant to your audit, and yet the government has seen fit to deny those documents to your office. All of us on this committee should take that extremely seriously. When the Auditor General - whose powers, by law, are unrestricted - is denied access to documents, that is a very serious matter. I wonder if you could describe for us briefly, Mr. Lapointe, what documents in particular you think you needed to see and had a right to see but yet were told you could not see.

MR. LAPOINTE: Mr. Steele, there were two primary types of documents that were withheld from us during the course of this audit and one was documents that were legal documents to which solicitor-client privilege applies and the other were Cabinet documents, primarily submissions to Cabinet. Those are the types of documents withheld and those are the reasons given in each case. There were numerous instances in which - for different documents that we asked for, specifically relating to different parts of the audit - in which

it was made plain to us it was a blanket decision not to provide them, regardless of the situation.

Now there was one case, for instance, that we report, in which we were looking to determine whether legal advice was given in relation to the contract and what decisions were made, therefore, about the contract. We couldn't make a decision or a conclusion about it because we didn't have enough information about it.

One of the areas that I was concerned about was a process decision in which, in some cases, my staff asked for a routine request to look at files, which is what auditors do when they go into the area, and the files were first withheld so that they could be reviewed and documents could be taken out of them so that we wouldn't see them. Presumably they were documents to which the privilege issue applied. That, to me, was a potential serious interference just in our audit process.

MR. STEELE: I presume, Auditor General, that the staff of the Office of Immigration did not take it upon themselves to deny access to the documents - that they were acting under direction or on orders of someone higher up in the hierarchy. In your view, who was directing the withholding of documents?

MR. LAPOINTE: The direction, as we were told, was from the Department of Justice in terms of the solicitor-client documents and from Executive Council in terms of a Cabinet document.

MR. STEELE: In terms of the files at the Office of Immigration, that even though there may have been no Cabinet documents or no solicitor-client privilege, those were still vetted before your office saw them and documents that they deemed to be confidential were removed. Who was giving those directions?

MR. LAPOINTE: The direction, I believe, in those cases was from the Department of Justice. They were particularly looking for a solicitor-client document.

MR. STEELE: To your knowledge, Mr. Lapointe - both in your work experience here in Nova Scotia and in your previous long career in audit in the Ontario Government - have you seen a situation like this before where documents that the Auditor General has deemed relevant are withheld from the Auditor General?

MR. LAPOINTE: I would have to say that no, I have not on this scale and as a blanket policy like this. We had some issues around this, as you know, and I have reported them in other reports in the past, particularly to do with some instances around our financial audit and so on. But this is a new occurrence to us.

MR. STEELE: What are you going to do about it?

MR. LAPOINTE: Well, my recourse in situations like this is limited. I am an officer of the House of Assembly and I report to the House. I believe that my role is to report issues like this to the House of Assembly and at that point I have taken it to the group that I report to. All I can do is bring it to the House and bring it to the attention of the House.

MR. STEELE: As you know, we've looked at this before. What concerns me most is the precedent. I believe it started with the Economic Development files, the potato farm and Magic Valley where the government first denied us documents that we had asked for. Now, that didn't go anywhere because there was an intervening election ending the work of the Public Accounts Committee and it wasn't pursued after the election but then they withheld them again in the matters concerning the member for Cumberland North. Now they're doing it again in a much more serious file with a great deal of money involved where political reputations are at stake. You can't help get the feeling that the government has now made a concerted effort to withhold documents that would reveal what really happened here.

Now, the House will do what it can and in that vein, Madam Chair, I just wanted to notify you and the other members that at the conclusion of the question and answer session, I have two motions that I wish to bring forward for the consideration of the committee with respect to this point that's under discussion now. Mr. Lapointe, has your office considered taking the government to court in order that we can once and for all have an answer as to whether the government is entitled to withhold documents simply because it deems that it doesn't want to release them?

MR. LAPOINTE: At this point it's not something I'm considering. I don't know, I haven't thought about it to see whether, one, that's necessary and, two, that's appropriate. As I have said, the appropriate route for me is take things to the House of Assembly and at this point that's all I'm considering.

MR. STEELE: It seems to us here that the government's position on this file has gone beyond caution and has gone to the point of a cover-up. You have the right under the Auditor General Act to get these documents. You've told the government you want the documents and yet they are still refusing to give them to you. That is new and that is very, very serious.

Let me turn to another question that's going to be on everybody's minds today and that is the question of refunds. A number of nominees went through the program and a refund was offered, oddly enough, to the people who had not been through a mentorship. So the people who had newly arrived or hadn't yet arranged a match were all offered a refund and I understand that a number of people - well, certainly far from all of them - have taken the government up on its offer. But the people who went through the mentorship, some of who had thoroughly unsatisfactory experiences bordering on the fraudulent, they were not offered a refund of their money and these are the people, ironically, who have stayed in Nova Scotia.

This committee heard some very heart-wrenching stories about what some of the immigrant families had gone through in their efforts to establish themselves here, going through mentorships that, for want of a better term, can only be called fraudulent and yet they were the ones whose money was taken and the government hasn't offered it back. Based on everything that your office has done so far, do you have a position on whether refunds should be offered to all nominees?

MR. LAPOINTE: I must admit I did expect a question on this but I have to say that it is not the role of this office to make recommendations on policy and that is a policy decision. It was never our intention to look at this file and to determine whether in fact the government should be making policy decisions on repayments to individuals because that is the government's decision to make; ours is to audit the program to determine how well it worked or how well it did not work. So I would not venture over into that and I will not, in the second phase of this audit either, make recommendations specifically on that.

MR. STEELE: Now, the reason that that seems peculiar - that position that you've taken - is not because it doesn't make sense because it does. It's because the government, the current Minister of Immigration has said that he would wait for your report before deciding whether to offer refunds to people who had already been through the mentorship. Now, why would he have thought that your report would answer that question?

[10:15 a.m.]

MR. LAPOINTE: I understand that this has been said, I've heard it several times, that government was waiting for our report to make these decisions. That is, I guess, the government's right to do that but I never indicated in taking on this assignment for the House, that we would be making recommendations in this regard. It may be that our report has the information the government wants to make that decision or it might not, but our audit was not oriented to that goal.

MR. STEELE: Now the minister - not once but several times - said that he was waiting for your report before deciding on the refund question. You would have seen the news reports with respect to that. At any time, did you or anyone in your office communicate with the Office of Immigration, the Minister of Immigration to say that there would be no such recommendation in your report?

MR. LAPOINTE: I don't think that we would ever have - no, we would not have communicated what our recommendations would be. We don't do that until we know what they are but I made the assumption that people would understand the nature of the work that we do. It was really not my job to be having that kind of discussion with the minister as to what their intentions are.

MR. STEELE: In your opinion, based on all the work that your office has done to date, did the nominees get their money's worth in the Mentorship Program?

MR. LAPOINTE: We may be in a position to say more on that when we report in the Fall, we're looking more deeply into the mentorship process and the experience. At this stage, though, we looked at the question of the program achieving its goals and one of the goals in the program is to provide a sound mentorship experience to people.

We looked so far into this as to look at the selection of mentor companies and we found that the program did not achieve this goal for the simple reason that firstly, there were insufficient numbers of mentor companies that came forward and secondly, of the ones that were selected, we reviewed the files to look at the evaluation of those mentors and then the bulk of the cases, we disagreed with the decision to select them and found that they did not meet the program's criteria and by those criteria, were not qualified to provide a mentorship experience to the mentors.

MR. STEELE: Now in your report you say that your office sampled 20 files; 16 acceptances of mentor companies and four that were rejected. Of the 16 that were accepted, you said there was inadequate information about 14 of them.

Now this led inexorably to inappropriate, inadequate mentorship experiences for many of the nominees, some of which can only be called fraudulent. There's another one in the Canadian Press story today, in today's newspaper, a gentleman who was told to visit the work site only every second week to pick up his paycheque, and otherwise he should go study English at the local high school. Somebody was getting a lot of money for doing nothing, or for promising to do something that they didn't do. That situation has repeated in many, many cases that have been made public.

In your view, based on all of the work that your office has done to date, is there any basis on which any aspect of the Nominee Program should be referred to the police for a criminal investigation?

MR. LAPOINTE: We don't have any information like that at this point. That is not what this first phase was doing. We are looking at the operations of the program and not looking down at that level.

MR. STEELE: Now if in the remainder of your audit, which I understand will focus at least in part more heavily on the specific mentorship experiences of individual nominees - do you consider it part of your office's mandate if you do come across potentially fraudulent activity, to refer those files to the police?

MR. LAPOINTE: Well yes, it's always part of the responsibility of this office to report any wrongdoing that we might uncover, or potential wrongdoing that we might

uncover in any of our work. So that if we did, we would, in fact, deal with it appropriately, yes.

MR. STEELE: Now this program started back in 2002 with the signing of an agreement with the federal government in which certain commitments were made by both sides and that really was the start of the Nominee Program. One of the things that you point out in your audit report today is that a significant number of the obligations incurred by the Government of Nova Scotia under that agreement have not been met. In your view, does the federal government have any recourse of any kind against the provincial government for its failure to keep the promises made in that agreement?

MR. LAPOINTE: I might refer that question to Ms. Colman-Sadd.

MADAM CHAIR: Ms. Colman-Sadd.

MS. COLMAN-SADD: With regard to specific requirements that were not met, I don't recall any specific recourse that the federal government would have had under the agreement. This was a limited term agreement. It was for a five-year period and I guess one point of note with regard to it is that a permanent agreement has recently been signed with the federal government to allow Nova Scotia to indeed operate nominee programs.

MR. STEELE: In all of your file review, have you seen any indication from the federal government that they intend to take any actions in response to Nova Scotia's failure to keep its end of the bargain?

MS. COLMAN-SADD: No, we have not.

MR. STEELE: Let me turn then to the question of the trust fund which contains a substantial amount of money. Are you in a position to say today how much money is in the fund?

MR. LAPOINTE: I'm sorry, how much?

MR. STEELE: Are you in a position to tell us today precisely how much money is in the trust fund?

MR. LAPOINTE: Is in the trust fund? Not specifically at this point in that the amount of the trust fund presumably changes on a day-to-day basis and is being reconciled and managed by the Office of Immigration. We had an amount of approximately $69 million at the time of print that we got from the government records.

MR. STEELE: I mention that because one of the key questions with respect to refunds is whether there is enough money in the trust fund in order to provide a full refund

to all the nominees so we'll certainly be watching that very closely. Let me end by asking you this question, who is accountable for this mess?

MR. LAPOINTE: That's somewhat of a loaded question in the way that it's phrased but I would say that the people who are accountable for the program are the departments at an operational level, the departments that manage them. Originally the Department of Economic Development had designed it and put it together and then the Office of Immigration that is running it now. I do have to say that in terms of responsibility, to put credit where credit is due, that the Office of Immigration when it took control of the program did make substantial efforts to get it under control and to improve it, and have taken some positive steps along the way to do that.

MADAM CHAIR: Order, please. Thank you very much. The time has expired for the NDP caucus. I recognize Ms. Whalen for the Liberal caucus. You have 20 minutes.

MS. DIANA WHALEN: Again I certainly want to welcome you and I appreciate all of the work you've done in this first stage of the audit of this program. My big concern this morning was that we've just really discovered today that it's a two-part audit, that there was so much that you needed to do that you weren't able to provide some of the answers that people have been really anxiously awaiting in the time, you know, between October when this all came to light - or one could say from the time it blew up - until today. I just really want to stress the high expectations and I think perhaps we've put you under too high expectations in this regard about being able to get an answer by today.

I think what's really important is there are people who are waiting and people who have trusted Nova Scotia who came here and chose our program to start their new lives. As was mentioned, we've had an opportunity at the Public Accounts Committee to hear directly from many of those people and they were waiting as well for today to see really what this audit will mean to them and whether or not their eligibility for a refund might be clarified and so on.

We talked about the minister continuously saying that he's waiting for this report and I think that raised expectations that there would be some answers here for the people who, you know, really will be making life decisions around whether or not to stay in Nova Scotia or perhaps to leave because, in fact, they feel that they've been misled and are very, very disappointed with the way the program has been executed here. As I've said before, these were the ones who came to pilot and test the program, who trusted us in the initial stages so it's really unfortunate that we aren't at a stage where you can make a decision or a recommendation even to government or to the members of the Legislature about what we could do next.

On the refund, that is the key issue for so many people in their lives. Again, I wanted to ask you about the policy decision, which you mentioned to me earlier in the morning about

whether or not you have the opportunity to say whether the fund that is being held - which is something like $69 million, I think you say in the report - whether that fund has the capacity to refund the nominees' money to those who've stayed in Nova Scotia and, in fact, did have mentorships? Are you able to comment specifically on that, in your capacity to make that determination?

MR. LAPOINTE: To the extent that we have information, we can comment on the capacity of the fund to make refunds, but the issue here is the limitation on two things. One is the information that's available around that and, two, the potential policy decisions as to what refunds they're going to make. Given that we know how much is in the account within a certain range, to know whether it's appropriate, you need to then make a calculation as to what amounts the policy intends to pay to what individuals, how much they might be entitled to. You can therefore do, in effect, simple mathematics to determine how much money would be required for that.

Right now, there is a policy decision to make refunds to certain classes of individuals that meet certain criteria. I can't imagine there isn't the funds in the account to pay for that because that's fairly limited, but the question is, we can't tell that exactly because we don't have the information available from the department's files to say precisely how many individuals are qualified for that.

If you want to consider the capacity to expand refunds to other classes and individuals, firstly it depends on what those decisions would be as to what refunds would be paid but I don't think the full information is available in the files to be able to say how many individuals qualify or not. It's referred partly back to part of the report in which I stated we're not able to find in the government records, records of residence for all of the participants in the program. You don't know, for instance, if people meet the 12 month requirement for being in the province.

The other aspect of that which is uncertain is as to the ownership of some of the funds in it. As you know, there is a current dispute - some of it with a previous contractor - as to the ownership of some of these funds and some of them are uncertain; the interest that accrued on the funds, for instance, is up for dispute. It's uncertain, if funds were not paid out, for instance to amounts that were allocated for agents and were not paid because there were no agents - who owns those funds? There are a number of these issues about the ownership of the money which has to be determined before you know whether they are available to make payments or not.

MS. WHALEN: On the question of the legal dispute that's still outstanding, have you any sense about whether this whole issue is going to be stalled - the issue around making refunds to people who already had mentorships? Will that be stalled indefinitely while they wait for a legal answer?

MR. LAPOINTE: I don't have any knowledge of that at all and I wouldn't because that really depends on the government's decisions on the funds and the policy decisions on the repayment and also on the direction of the lawsuit.

MS. WHALEN: When you do your audit in stage two of the trust account itself, will you be looking at actually documenting the amount of money that's under dispute so that we then know how much is available to the government to do the right thing to treat everybody fairly?

MR. LAPOINTE: We will be looking at more detail on the funds in the account but at this point, we can't say what we'd be able to say to conclude on it or not.

[10:30 a.m.]

MS. WHALEN: Okay, so we just have to wait. I have one other question I think is very important around that and that would be since you are unable to make a decision or even a recommendation - clearly the decision comes from government - but you aren't in a position to make a recommendation around whether or not other people should be eligible for the refund, is there, then, a pressing need for government to give you that direction by defining other options or other policies they want you to test?

MR. LAPOINTE: You see, it would never be appropriate for me or my office to make a recommendation whether refunds should be paid to particular individuals or not because that is clearly a government decision and that is a policy decision. Once a policy is made, our role is then to audit the implementation of that decision and to see whether it was achieved or not, but we are never going to recommend a policy. It is up to government.

MS. WHALEN: Whose job is it? Whose job could it be?

MR. LAPOINTE: It is the government's job to make decisions on policy, and we simply make an attempt to understand what that policy is so that we know what we are auditing against. We don't recommend policy and simply will not.

MS. WHALEN: Do you think, again, that the minister was aware that your report today would not address the issue of refunds - could you answer that?

MR. LAPOINTE: No, I can't. I don't know what was in the minister's mind or the minister's . . .

MS. WHALEN: Well, I definitely think that more than six months has passed while people have been anxiously waiting. Their lives are, in fact, held in the balance and decisions on the part of their families are waiting. The minister has repeatedly said he was waiting for the Auditor General. So it appears to me the government has dragged its heels and will

continue to until the second part of your report comes out unless we are very clear with government that it is their responsibility to outline another policy today, or soon, so that you can then audit whether that is achievable, or their own staff can determine whether it is achievable. Would you agree that something should happen?

MR. LAPOINTE: Well, I can't guarantee, firstly, that the information is in this report that the government is looking for to make that decision. I also certainly cannot guarantee that the second phase of the report will contain information which will help to make that decision because we are not orienting to that - we are orienting to simply going out and auditing the program and reporting what we find.

MS. WHALEN: I understand and perhaps some of us have been naively optimistic that there could be more to that. I, in fact, have an accounting designation, and I understand the restrictions you have on audits, but I just feel that it is so disappointing. I have to say today it is profoundly disappointing that the answer can't come directly today, or indeed perhaps even in the Fall, for the people who are waiting. I believe the onus is now on government to do something right away to begin to address that.

I am just going to go back to the question of the accountability and access to information because I do believe that your hands have been tied throughout this process and your audit. I wondered, in one place you actually talk about having - I have to get the right word - basically the fact that the lack of information has meant that you have to kind of qualify your audit. Is it qualifying the scope of the audit? There is a term and I think it means something quite significant - can you explain what that means when an auditor actually has to say I have a "scope limitation"?

MR. LAPOINTE: I will refer that to Evangeline.

MADAM CHAIRMAN: Ms. Colman-Sadd.

MS. COLMAN-SADD: If you are looking for the specific section it refers to, the restrictions in access section starts on Page 8, and I can't give you the specific paragraph number but it is discussed in there, and the specific term is a scope limitation - it is a situation where an auditor does not have an adequate amount of information to reach a conclusion. In this particular instance the scope limitation relates to a specific part of our audit which is the contract that the province signed with a private company to operate and help design the Nova Scotia Nominee Program.

What we would have liked to have been able to determine is what suggestions the Department of Justice may or may not have made to changes that should be perhaps implemented in the proposed contract that the private contractor included in their unsolicited proposal - we were denied those documents under claim of solicitor-client privilege, so we were not able to assess who should be held accountable for the inadequacies in the contract.

MS. WHALEN: I notice Paragraph 26 in the report actually says a couple of things about it but it ends with: "Such restrictions reflect poor public accountability and are contrary to the Auditor General Act." So you clearly feel that this is a call to action, that something should be done about this. I think the people of Nova Scotia deserve a lot better and the people who have been anxiously waiting for answers deserve a lot better. I'm wondering if you could answer the question that had you had full access to information, you know, as you were asking for it and in a timely manner, would you have been able to complete the full audit by today or by this month?

MS. COLMAN-SADD: I guess a couple of things - when you are denied documents and you don't receive them, it's not really possible to know what impact they would have had on your audit work because, obviously, you don't know the content of those documents. With that said, I don't believe we would have been able to complete the full audit by today regardless of access to information just simply based on the extent of the work, as Jacques referred to in his opening comments.

MS. WHALEN: In earlier talks and in your presentation to us this morning you talked about other jurisdictions and their access to information. I wonder, could you tell me again which jurisdictions deny information to their Auditor General based on, I guess it's solicitor-client privilege which would be the legal argument that the Department of Justice is giving you to withhold information?

MADAM CHAIR: Mr. Lapointe.

MR. LAPOINTE: On solicitor-client privilege? Yes, I can say that with solicitor-client privilege that this jurisdiction is the only one which routinely denies information, solicitor-client information to the Auditor General. There is one in which we are still looking for a little bit more certainty as to what occurred, but it hasn't been really much of an issue in that particular province, so it really hasn't particularly come up. Otherwise, aside from that one, this is the only jurisdiction.

MS. WHALEN: So we stand alone in being the only jurisdiction that has refused to give information to our Auditor General on the basis of solicitor-client privilege?

MR. LAPOINTE: That's our information.

MS. WHALEN: Yes, you know, I think that is a shameful position for us to be in in this province, and I think in previous years we've had a number of occasions where the government has been identified as the most secretive in Canada. This just bears it up, I think once more, that they have not changed their attitude towards government accountability and the right of people to know. It's essential and I think all of us as members of this committee should feel offended on your behalf as well because you're doing work that we asked you to undertake and that the people of Nova Scotia deserve an answer to.

So in terms of the key missing piece, it was around the accountability about whether or not the contract that was originally signed with Cornwallis to be our agent and undertake this economic stream for nominees, whether or not the contract was properly reviewed and properly conceived, and I think you note several things that were wrong in the original contract. I wonder if you could just review for us the number of things that were not met - I mean, we know we're in trouble today because there were gaps. The termination clauses might have been one, but I think there were several others.

MR. LAPOINTE: Yes, there were and, again, I will ask Evangeline to answer that question.

MS. COLMAN-SADD: With regard to the contract, what we noted was that there were a number of areas that we felt should have been included in a contract, which were not. They include dispute resolution mechanisms if there are disputes between the parties; adequate termination clauses - there were some termination clauses in there but they were rather limited; dealing with the funds in the trust account and any unclaimed money - how would those be dealt with, how would interest on the trust be dealt with, none of that was addressed by the contract; and finally we believe it's important for adequate audit access for our office and for the province really as well to be included in contracts, and that was also absent.

MS. WHALEN: Would you describe some of those missing pieces as being standard in any contract that the government would enter into?

MR. LAPOINTE: I would say they are a standard business practice. Given our experience in other audits, I would not be willing to say they are standard in government contracts because we have had other findings in other audits about limitations in contractual agreements with outside parties.

MS. WHALEN: Can I ask - would that contract have been written by the Department of Justice or, if not written by them, was it vetted by them?

MR. LAPOINTE: I can ask Evangeline to speak to that one, too.

MS. COLMAN-SADD: The province received an unsolicited proposal from Cornwallis. That unsolicited proposal included a draft contract and, if you look through the Contract Adequacy section, you will note that one of the findings is that we do not feel there were substantive changes to that draft contract to the final signed contract.

With regard to whether or not it was vetted by legal counsel, again, we were denied access to any changes the Department of Justice may or may not have suggested Economic Development make to the contract. One important distinction that Justice did make to us though, in sort of a more generic manner, is that the decision on a contract is not theirs to

make, it's theirs to provide advice - it's up to a department or office that they provide that advice to to decide whether or not to take it.

MS. WHALEN: I understand that and that's an important distinction, but what about whether they even saw the contract or provided any advice? Are you able to say whether they saw the contract prior to it being signed by the minister?

MS. COLMAN-SADD: I am able to say that they did see the contract because they have indicated to us in their discussions that they did see the contract - with regard to what suggestions they might have made, I can't speak to that. The Department of Justice did indicate to us that the staff member that was responsible for giving advice to Economic Development at that time, that they were not asked to negotiate with the private contractor's legal counsel.

MS. WHALEN: So, you have no idea whether they did - I mean, I would think any lawyer would glaringly see the shortcomings in this contract, there were some significant areas left dangling and that's their job, to identify and protect, really to protect the Province of Nova Scotia from entering into contracts that are going to be in some way, potentially costly or run into difficulties legally - I think you would say that would be the reason to call in the lawyer and look for advice.

MS. COLMAN-SADD: I guess that's why we reported a scope limitation, that we are not able to conclude, based on information that wasn't provided - who was ultimately responsible, we don't know. We don't know what changes legal counsel may or may not have suggested to the contract, and we don't know whether or not Economic Development took all, some, or none of legal counsel's advice.

MS. WHALEN: Okay, I think that's a very important piece of information that's missing, to see really whether the government acted in good faith to protect the people and the interest of Nova Scotia, so that has to be looked for.

On the Canada-Nova Scotia nominee agreement that was signed, is there any indication that the fact that we clearly had not met some of the requirements - not least of which is to make the funds auditable - will that have any negative implications, do you think, with the federal government as we go forward? Any indication that would be seen as a substantial shortcoming or mistake on our part?

MS. COLMAN-SADD: I can't speak to what the federal government may or may not conclude or look at with respect to our findings in this regard. I can say that there has been a permanent nominee agreement signed, a permanent agreement on immigration allowing the province to operate a nominee program with the federal government.

MADAM CHAIR: Order. The time has expired for the Liberal caucus. I recognize Mr. Porter with the PC caucus, and you have 20 minutes.

MR. CHUCK PORTER: Thank you, Madam Chair. Again, publicly now I wish to again extend our thanks to the committee for all the work that has been done. I know it has been an ongoing effort and will continue to be in the months ahead.

Just a few questions. In your opinion, did the department act properly, Mr. Lapointe, when it ended this program on June 30, 2006?

MR. LAPOINTE: You're asking, did the department act properly?

MR. PORTER: Yes.

MR. LAPOINTE: We don't have any evidence of improper activity - there were two departments involved, Economic Development and then, later, the Office of Immigration. We've pointed out some inadequacies, we feel, in the work that was done, but not improprieties, according to our findings.

MR. PORTER: So, to be clear, nothing improper that you discovered along the way, only inadequacies in certain areas? I just want to be clear on that.

MR. LAPOINTE: No, there's nothing in our files on the audit work done to date and the work we're reporting here that points to improprieties on the part of the departments, no.

MR. PORTER: Within the contract, did Cornwallis perform as the province expected? Did your findings relate to that? Do they say? What can you tell us?

[10:45 a.m.]

MR. LAPOINTE: Well, I would say, based on the actions of the Office of Immigration, they did not, and that the department suspended the contract. As to the specific reasons for that, I don't want to tread there too much because it's now under dispute. But, clearly, they were not satisfied with the program as it was being administered or it would be continuing today, one presumes.

MR. PORTER: Did the report state that activities were reported regularly to the department by Cornwallis?

MR. LAPOINTE: The activity that was reported by the contractor was according to the agreement. The agreement had very limited requirements in terms of reporting, it hinged primarily on the audited financial statements once a year and yes that was, in fact, reported. They also did provide some quarterly reports on activity and there were other contacts.

MR. PORTER: Were the reports found to be accurate that were there?

MR. LAPOINTE: The specifics on the content of these quarterly reports, we weren't auditing them, they were not part of particularly the scope of what we were looking at, so I can't say to what extent they might have been accurate or inaccurate.

MR. PORTER: Do you acknowledge - I'm sure that you do - that the province is engaged in a lawsuit at this point in time and that the documents that we're referring to being withheld could significantly weaken the province's position? Do you take that into account during the audit process that you've just completed?

MR. LAPOINTE: Sir, the question was, sorry, there was background noise and I clearly missed the audio of what you were saying.

MR. PORTER: And I just missed what you said as well.

MR. LAPOINTE: Sorry, I missed some of the question that you were asking.

MR. PORTER: With the province being in a lawsuit with Cornwallis there were documents that were not provided, things like solicitor-client privilege, et cetera. Do you think that would weaken the province's position if they were put forward at this point in time?

MR. LAPOINTE: Well, the position, I know that some of the documentation from government has made that point. My position is that it would not and that a solicitor-client document is confidential whether it is provided to me or not. Once provided to me it remains a confidential solicitor-client document and we can't divulge it and would not.

MR. PORTER: Just so I'm clear on that statement you just made, we've tended to make a fairly big deal that some of these documents have been withheld then. How would that impact your report then when this is a public report? As of right now, this morning, this report is public. So information from those solicitor-client documents, are you telling me that that would not have been part of this report?

MR. LAPOINTE: The information in confidential documents is used by us for a number of reasons, one, to understand the operations that we're looking at and to draw conclusions. When we have confidential information we never disclose the specific contents of that report, whatever kind of confidential information. We might see someone's payroll records and certainly not divulge their salaries or any other information about them because of privacy issues, but it is still useful to us in drawing conclusions about the activities. If we felt that something in a solicitor-client document should be revealed, in that case we could only ask the owner of that document if we could provide that information in a public forum. If the answer was no, then we would not. Without knowing what the information is, we have

no way of knowing what kind of impact it would have on our audit or not, but that's how we would treat the information.

MR. PORTER: So would I be fair in stating then that in your opinion, the risk would be low of information being divulged in any type of report that would be put to the public by way of the Auditor General's Office? You can say you can look at this documentation, just as an example - and I'm not a lawyer, I don't understand it all. But I do understand the confidentiality piece in that if there was something in that document and you cited, maybe you're not using salaries, maybe you're not using names - if there was a piece of information that related to your overall findings that became public in the report, I still don't understand how that couldn't be a piece of that confidential document being released?

MR. LAPOINTE: It is hard to make a kind of general, broad-based characterization of how this information is treated because it depends on the information itself. Quite often, knowledge of what is in confidential information gives you an understanding of what has transpired and thus allows you then to make a conclusion and to go forward and do the next steps of your audit. So it can lead to other things and allow you to conduct your investigation and your examination in a way that's based on more knowledge. That can lead to the findings that you can divulge because it has pointed you in the right direction but the specifics of a document are confidential, and remain confidential in our hands.

MR. PORTER: The solicitor-client privilege documentation, do you believe in that as an auditor and as a Nova Scotian, and is there a part in here anywhere where Human Rights could play a piece in somebody being jeopardized in and around this whole legal proceeding until it is out, it's public as a result, and it has come before the court. There tends to be some belief obviously that there is potential for a case to be jeopardized by releasing certain documentation and I would only use myself. If I were part of a court case, I don't think that I would want things coming out because it could impact me in a negative light I guess, and/or the other party. I'm speaking not specifically but in general as an individual. I'm just curious as to your thoughts on that?

MR. LAPOINTE: If I understand your question correctly, you're asking as to whether I recognize a potential risk in a lawsuit of my office being in possession of confidential information. My belief on this is that solicitor-client information in our hands remains privileged and so, therefore, cannot be called into a court, it remains a solicitor-client document. So the rules that apply to those in the normal way of things in the courts remain so that it may help with the understanding of an audit and in other jurisdictions that's precisely what happened. But it should not add to the risk of any lawsuit that the government is involved in.

MR. PORTER: I only asked that question because it has been mentioned in this committee, as requested in other cases and so on that we've heard about, that there has been documentation surrounding solicitor-client and Cabinet privilege and so on. I think that

there's an issue. Is your department saying today then that if that documentation went to you, you're guaranteeing 110 per cent that no risk would be implemented toward a case that is before the courts in this province? Whether it be this case or any other case I guess, Mr. Lapointe, is where I'm going with that.

MR. LAPOINTE: I think any individual would be foolish to guarantee 100 per cent with any court case because if I understand the way courts work, any court can at any time rule that the need for justice in the court will override even solicitor-client privilege. The normal way of doing this is that a judge will examine solicitor-client documents and determine whether in fact that privilege should be overruled. That can occur at any time but the fact of the document being in my possession as opposed to the department's possession should make no difference to the courts. It's still the same document regardless of which area of government it may come from.

MR. PORTER: So it wouldn't open the Auditor General's Department, I'm now referring to or yourself, up to being called before the courts to speak to a specific case? Would it go that far do you think?

MR. LAPOINTE: As to whether we might be called as a result of our audit work, just to be part of a lawsuit, I don't know. The issue is that the privileged information remains privileged in the courts regardless of where that piece of paper resides. Whether it resided with us or with the Office of Immigration, or with the Department of Justice, or any other department, the rules still apply to it.

MR. PORTER: I want to talk a little bit about the Cabinet confidentiality piece as well. You stated there were four provinces, I believe, in the country that use the Cabinet confidentiality privilege. Is that correct, there were four?

MR. LAPOINTE: All but three provinces, four counting Nova Scotia, do provide Cabinet documents to auditors.

MR. PORTER: In looking at those jurisdictions, was the question asked why, why do those three others withhold, how do they compare to us or do they compare? How are we, in relationship to them and why do they do it?

MR. LAPOINTE: We were looking to find out what is provided and not doing the kind of research as to what the legislation is behind it, was there tradition behind it or what are the processes around them. They vary considerably from province to province but I know that in three provinces it has been indicated that the information was not provided. In the others, the auditors do, in fact, routinely receive documents of this nature.

MR. PORTER: So not unlike, I guess, in relationship to the solicitor-client privilege, Cabinet privilege, there is something there that says, as solicitor-client, there would be I, as

the client, would not expect that that information would be divulged outside of my solicitor. As would be the case with Cabinet, they would not, that business, for example, doing business with the government could potentially be jeopardized by releasing certain information. Do you agree or disagree with that point?

MR. LAPOINTE: The rules are a little different in that they are different types of documents and there is the question - the question of solicitor-client privilege is pretty well established over a long period of time and the courts are always being involved in these, as we know.

The issue of what is confidential, in terms of Cabinet information, is more fluid and has changed more over time and it varies more from jurisdiction to jurisdiction as well.

MR. PORTER: Thank you. And just one final thought; I know in all of the reports that you provided since being here, that each and every one of them have been detailed and well defined but each and every one of them have come with recommendations. I don't see that in this. I see observations on the quality of things. I do not see recommendations. I'm kind of curious as to why we would not have, given that you found so many observations and things did not appear to be qualified, why are there no recommendations with this report?

MR. LAPOINTE: The recommendation we make, we make a single recommendation at the end of this audit. The reason for that, as we started to look at, during the course of the audit, specific recommendations we could make with specific operations of the program, we realized that it was to a large extent a moot point in that the bulk of the program that we were looking at has been suspended, is being reconsidered and it's operating quite differently. So we're looking back at a period in time and the situation has changed.

Our concern was that we make a recommendation that the department undertake, internally, a very broad-based evaluation of the program. In order to determine - not just what with this program what should be done. But what lessons could be learned to apply to other parts of the nominee program that we didn't look at, or to other programs that have a similar nature. That is what we thought was the most significant recommendation we could make in this case, was that evaluation. It came down to one recommendation, in effect, which is broader based.

MR. PORTER: Thank you very much again for your time today, for being here, for answering our questions and I very much appreciate that. Thank you, Madam Chair.

MADAM CHAIR; Thank you. That concludes our questioning portion of the meeting. I would now ask Mr. Lapointe if he would like to make some concluding comments.

MR. LAPOINTE: Thank you, Madam Chair. I just want to say that as usual, I appreciate the opportunity to come before this committee of the House and to discuss our report and to put it before you.

I do understand that there has been developed over the last few months significant awareness in anticipation of this program. I don't know whether the program is delivering all that a lot of people wanted to see in it but we're reporting now what we've found. We will come back with the remainder in the Fall.

Thank you for the opportunity today.

MADAM CHAIR: Thank you very much for being here today. I know I speak for all the members when I say we very much appreciate the work of your office and we enjoy very much the relationship we have with your office. So thank you very much.

At this point I recognize Mr. Steele.

MR. STEELE: Thank you, Madam Chair. As I mentioned during the question and answer session, I did have two motions to put to the committee. I'd like to ask the clerk to distribute the copy now. I do apologize to the members, this is handwritten but that's simply because when I walked in here this morning none of us had any idea what was in the report, so I had no way of anticipating it. While it is being distributed I'll read the first motion:

Moved that the Public Accounts Committee direct its Chair to draft, sign and serve subpoenas for the production of documents on the units of government identified in today's Auditor General Report as having withheld documents from the Auditor General and that the PAC further direct its Chair to report to the House of Assembly, immediately at its next sitting, any non-compliance with these subpoenas.

[11:00 a.m.]

MADAM CHAIR: The motion is in order. The floor is open now for discussion.

Mr. Colwell.

MR. KEITH COLWELL: Yes, I agree with this motion. I am really upset about this whole thing. I mean, it is one thing if our committee is refused information for client-solicitor information, which I still don't agree with, and Cabinet confidentiality, and I think that is something we must address some time in the future. But when the Auditor General is refused this information, it is totally unacceptable, absolutely unacceptable. We have seen what appears to be a major coverup in this case.

Hopefully, that is not the case, but when the Auditor General of this Legislature, not of this government, of this Legislature, is refused critical information, and the Auditor General made it very, very clear - and I have never had any doubt with the Auditor General's Office at any time - that any information they would get that is confidential, they would ever release, because they have never done that and they never will, but they need that information to move forward to ensure the interests of Nova Scotians are protected. I think this is an affront to the Legislature, it is an affront to the people of Nova Scotia and I think it is overdue that this government is held accountable on these issues.

I would fully support this motion. I believe that it is the right thing to do and I would like to make a minor amendment to that, that the Auditor General be provided with the information, directly along with the Public Accounts Committee, because it may be different information we receive than the Auditor General should receive. I would like to make that as a friendly amendment.

MADAM CHAIR: Mr. Steele, are you okay with that friendly amendment?

MR. STEELE: I am sorry. I wonder if the member could repeat that, please.

MADAM CHAIR: Mr. Colwell.

MR. COLWELL: Yes, I would like to make, as I say, a friendly amendment. I don't know where you would word it in here, but that the Auditor General receive the information, all information, that has been requested by the Auditor General to do his work properly and that, indeed, the information be provided to the committee a well, as this motion indicates.

MADAM CHAIR: I see the Legislative Counsel conferring with Mr. Steele.

Mr. Steele.

MR. STEELE: If I understand the motion, I am not sure I entirely do, it is whatever material we would receive in response to the subpoena, we would share with the Auditor General, which I would take as a matter of course, in any event. But rather than a friendly amendment, which I guess in procedural terms, doesn't exist, if the member wants to move an amendment to my motion, then I will say that I will happily support that amendment.

MADAM CHAIR: Mr. Colwell will make that an amendment to the motion. First of all, is there any further discussion on the amendment?

Mr. Porter.

MR. PORTER: On the amendment or on the motion?

MADAM CHAIR: On the amendment. No further discussion on the amendment? We will vote first on the amendment.

Would all those in favour of the amendment please say Aye. Contrary minded, Nay.

The motion is carried.

Now, on the main motion.

Mr. Porter.

MR. PORTER: Thank you. I think it is appropriate to mention that just moments ago the Auditor General stated no improprieties on this when asked questions with regard to the government's position. We have solicited, and asked for documentation to be provided before. We have been through this. At least our caucus is going to agree that we believe that Cabinet privilege is very important to not only everyone in Nova Scotia, but to the businesses that they are dealing with, the contracts. We believe that solicitor-client privilege is also very important to the people in Nova Scotia. This motion clearly continues to go along the lines of politics ahead of people in this province and I want that stated for the record because that is where it is. Thank you.

MADAM CHAIR: I, too, want to say something about this. The Subcommittee on Public Accounts had not fully dealt with the documents that had been refused and it was certainly our intention to have this on our Fall agenda. Today, with the interim report and the fact that the Auditor General has been refused these documents, I think impress, certainly on me, and I'm sure on my colleagues, the importance that perhaps we need to bring forward, at a somewhat earlier date, the issue of not having received those documents.

So, it has never been the case that we were satisfied with the response from the various departments and Legislative Counsel has given us a very excellent legal opinion with respect to the issue of Cabinet confidentiality and public accountability is at the core of the issues that this committee deals with and I fully support this motion.

Are there any further speakers on the motion? Would all those in favour of the motion, as amended, please say Aye. Contrary minded, Nay.

The motion is carried.

Mr. Steele.

MR. STEELE: Thank you, Madam Chair. My second motion reads as follows: Moved that the Public Accounts Committee direct its Chair to invite the Premier of Nova Scotia to appear before the Public Accounts Committee at the earliest opportunity, preferably

before the end of June 2008, to explain and answer questions concerning his government's position on disclosure of documents to the Auditor General.

MADAM CHAIR: The motion is in order. Is there any discussion on the motion?

Mr. Porter.

MR. PORTER: Once again, you know, politics ahead of people, this is very clear. The committee has done a lot of work, both in subcommittee and in the full committee, the reports that have been presented, the witnesses that have been here, the deputy minister has been here and I think that those questions have been adequately answered and asked and I'm certainly not going to support this motion.

MADAM CHAIR: Mr. Colwell.

MR. COLWELL: We're not going to be supporting the second motion. The reasons we're not going to support it, we believe that the Premier should definitely come in, we have no question about that. I believe it is up to our subcommittee to set the agenda for who is coming in, the Premier, there are many other ministers involved in this, there are many other staff that we should talk to, now especially that we've had the Auditor General's interim report, so we won't be supporting this motion until the subcommittee meets. Indeed, we may meet and decide that the Premier should come first, that could be the case, but until that happens, we're not prepared to support this.

MADAM CHAIR: Just for the record, the subcommittee actually doesn't set the agenda of this committee, this full committee does. The subcommittee meets for administrative reasons to discuss potential witnesses and make recommendations. Just a minor point, this committee actually does set the witnesses. Mr. Steele.

MR. STEELE: Madam Chair, I was about to make the same point, which is that the subcommittee makes recommendations to this committee, but this committee is free, at any time, to set its own agenda. I'm disappointed to hear that the Liberals want to put this off, because one of the problems we have around the Nominee Program is lack of accountability.

We have had a revolving door of ministers, seven ministers in six years. We've had six deputy ministers. One of the few constants here has been the Premier who was in Cabinet when the agreement was approved, who was the first Minister of Immigration and now is the Premier of the province, who is withholding documents that the Auditor General deems to be relevant and necessary for his audit. I can't think of anybody else who can speak to that issue.

The motion is worded as such that the question here is not to question the Premier about the Nominee Program, it is to question him about his government's policy on non-

disclosure to the Auditor General. Nobody but the Premier can answer those questions, so I'm quite disappointed that the Liberals will not be supporting this motion, which to us seems essential to get to the bottom of the matter.

MADAM CHAIR: Mr. Colwell.

MR. COLWELL: Yes, as the Chair knows, I'm well aware that the subcommittee does not set the agenda, but they do make recommendations to this committee that normally the committee approves, not always, I want to make that very clear.

The issue here isn't whether we want the Premier to come or not, we definitely want the Premier to come in, definitely want the Premier to come in at some point. To address what has been in this with the Auditor General's Report, it is doubtful whether the Premier can answer the questions of what information the Auditor General hasn't gotten from a specific department. It would be appropriate to bring in the minister of that department, the present minister of that department, to see what directives that minister had given or what the deputy minister had given.

As my honourable colleague, Mr. Steele, had indicated, there have been seven ministers and six deputies in that time. So the information that has been requested has been refused by the present deputy minister, the present minister and the present staff, whether that is in the Justice Department or in Immigration, either way. We want to get to the bottom of this as badly as anyone does. I think there has been an awful travesty of justice here, particularly with the Auditor General not getting the information they should be getting. They should get it automatically but, again, we believe the Premier should come in. I don't think the Premier should come in until we get a chance as a subcommittee to meet and make a suggestion. I would be willing to meet with the subcommittee today, even, to work toward that but I think the subcommittee should meet first to discuss this in more detail.

MADAM CHAIR: Is there any further discussion on the motion? Would all those in favour of the motion, please say Aye. Contrary minded, Nay.

The motion is defeated.

At this stage, I just want to indicate to the members that I will schedule a subcommittee meeting within a reasonable period of time, probably within the next seven to 10 days. We will be issuing the subpoenas. I will confer with Legislative Counsel and we will get those underway.

We now stand adjourned.

[The committee adjourned at 11:12 a.m.]