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

In Attendance:

Ms. Darlene Henry

Legislative Committee Clerk

Mr. Gordon Hebb

Chief Legislative Counsel

WITNESSES

Office of the Auditor General

Mr. Jacques Lapointe, Auditor General

Mr. Alan Horgan, Deputy Auditor General

Ms. Evangeline Colman-Sadd, Assistant Auditor General

HALIFAX, WEDNESDAY, OCTOBER 1, 2008

STANDING COMMITTEE ON PUBLIC ACCOUNTS

10:00 A.M.

CHAIR

Ms. Maureen MacDonald

VICE-CHAIRMAN

Mr. Chuck Porter

MADAM CHAIR: Okay, I'd like to call the committee to order, please. Today we have the Officer of the Auditor General with their final report on the Nominee Program. We will begin in the usual manner with introductions by members then a presentation and opening comments from the Auditor General.

[The committee members and witnesses introduced themselves.]

MADAM CHAIR: Mr. Lapointe, the floor is open for you.

MR. JACQUES LAPOINTE: Very good and thank you, Madam Chair. As you know this morning I submitted to the Speaker for tabling with the House, my Special Report on Phase Two of the Audit of the economic stream of the Immigration Nominee Program. I reported the first phase of this audit in June.

The first phase reported on the implementation and operation of the program. This second phase focuses on nominee experiences and the roles of mentors, agents and brokers. It also includes some additional work on the trust and reviews to a limited extent the residency refund option.

Before we begin, I should mention that some matters arose during the audit - as we noted in the report - that we decided were beyond the scope of the audit. Without making any judgment on them, we referred these matters to the RCMP for their review. It would not be appropriate now for me or members of my office to comment further on these matters beyond what is in the report.

With me here today are Alan Horgan, Deputy Auditor General and Evangeline Colman-Sadd, Assistant Auditor General. Evangeline was in charge of this audit and will be glad now to answer your questions.

MADAM CHAIR: Thank you. Ms. Colman-Sadd, do you have any further remarks to make or are we waiting for questions from the members?

MS. EVANGELINE COLMAN-SADD: No, you can go ahead with your questions.

MADAM CHAIR: Very good. The opening round will be 20 minutes per caucus and I recognize Mr. Steele for the NDP caucus.

MR. GRAHAM STEELE: Thank you very much, Mr. Lapointe and your staff. I would like to compliment you on Phase Two of your report, another thorough, excellent, informative report. In the seven years that I have been on the Public Accounts Committee, I don't remember a worse case of maladministration. The deficiencies listed in your report are stunning and the best analogy that I can use for what happened here is like a feeding frenzy, where a bunch of people smelled money and took shameless advantage of immigrants to this province, and to the shame of our government, they allowed it to happen by setting up a program with weak controls, poor oversight.

[10:15 a.m.]

Now today we sit here with any number of matters referred to the police for further investigation, criminal charges possibly pending in the future. It's hard to believe that in this day and age our government can fail so badly.

Now my first question to you is whether you can simply list for us each of the separate items that you have referred for further investigation to the RCMP?

MR. LAPOINTE: Yes, in fact, I can. We had one case of immigration agent involvement concerning a lawyer for several nominees who were apparently unaware of his services. We referred to the use of phantom agents - these are all areas you'll find listed in the report. We referred one matter involving two mentor companies and what appeared to be inappropriate payments for mentorships that we felt were not bona fide mentorships. One matter concerning the association between the operator of the program and a mentor company and finally, one more, the dispensation of interest from the program's trust account. Those were the areas specifically in the report that we referred to them.

MR. STEELE: What has the RCMP told you, if anything, with respect to their intentions of how they're going to go about dealing with these files?

MR. LAPOINTE: We referred the information in these areas to them for their review. Beyond that, we didn't ask them and they didn't volunteer what would be the next steps. Once it leaves our hands, our belief is that it is now out of our hands and into theirs, and it's for them to take the next steps and decide what to do.

MR. STEELE: Over the course of your audit, I know that you have amassed an enormous amount of information and you've conducted numerous interviews. Have you turned over your files to the RCMP or have you volunteered to do so if they request that you turn over your files to them?

MR. LAPOINTE: In fact, we have turned over to them the information we have on this so that they can review it.

MR. STEELE: Because I have to say that I am concerned. I am aware that these kinds of files involving potential commercial fraud take the RCMP a considerable amount of time to investigate - two years, three years, even longer. Anything that your office can do to speed up their investigation, I'm sure they would find helpful.

One of the other matters to which you refer involves an immigration agent who happens to be a lawyer and you spend some time in your report detailing the apparently inappropriate transactions involving this lawyer who had saved a substantial amount of money for no or very little work. Have you referred those matters to the Nova Scotia Barristers' Society for their investigation?

MR. LAPOINTE: At this point, no, we have not.

MR. STEELE: Do you intend to?

MR. LAPOINTE: We are looking at that right now and we'll make a decision definitely shortly.

MR. STEELE: I would very much recommend that you do so - the Barristers' Society's process is separate and apart from any criminal wrongdoing. If there has been a breach of the legal Code of Ethics, then the Barristers' Society needs to know about it. I don't think we should wait for someone else to complain. If you have the information and you believe the conduct of this lawyer is serious enough to warrant referral to the RCMP, then I would very much recommend that you also refer the matter to the Barristers' Society for their investigation.

You also refer in your report to the fact that there is an organization, the Canadian Society of Immigration Consultants, which has a Code of Ethics and the power to impose discipline on its members. Have you referred any of these matters to that association?

MR. LAPOINTE: No, we have not. Our first point of reporting was to the House and this committee. Now we can look at these to see if there is further reporting that we need to do and that's one that we'll look at as well.

MR. STEELE: In all of your audit work involving tens of millions of dollars, a number of people apparently lining their pockets, certainly behaviour serious enough to warrant numerous referrals to the RCMP, has there been any hint or allegation in the course of your audit that there have been any corrupt practices on the part of any civil servant past or present?

MR. LAPOINTE: What I can answer to that is that the only information we have as to the activities of public servants you'll find listed in the report. Beyond that, I'm not really in a position to be able to speak about, as I say, what went to the RCMP. I can only speak, as I said, to what is in here, but there's nothing in the report.

MR. STEELE: In the course of your audit of this program involving tens of millions of dollars and many people lining their pockets, has there been any hint or allegation of any corrupt practice by or on behalf of any politician or political Party?

MR. LAPOINTE: Again, in terms of what I can speak to, in terms of this audit, I can speak to what we're reporting here in terms of audit of the program. There's nothing in the report, in the audit that I'm reporting here, that speaks to anything like that. Beyond that, all I can say is that what is being reported to the RCMP, I'm not commenting on publicly. So I can't really answer yes or no to some of the questions you may want to ask me today, if it falls into that category.

MR. STEELE: Do you consider today to be the end of your office's involvement with the file? Are there aspects of this audit with which your office will continue?

MR. LAPOINTE: We consider that seriously when we make decisions as to where to go. Part of the decision on cancelling the subpoena initiative was simply that we had decided that our responsibility for it ends here and any further work we have referred on. So at this point, we're finished with it.

MR. STEELE: One of the things that appears to me to be the case from reading Phase Two of your audit is that the fault within the provincial government had more to do with misadministration, with a program set up with weak criteria, poor controls and others outside government then moved in, in what I've previously referred to as a feeding frenzy because they saw the opportunity for easy money. Do you think it's a fair characterization or not that the faults on the part of the provincial government here fall into the category of misadministration, rather than deliberate wrongdoing?

MR. LAPOINTE: I'll have to say that our role here isn't to assign fault or blame. What we are doing here and reporting here is auditing the operations of the program and reporting what we find and letting others judge as to that kind of question. Our findings here are that there were weaknesses, there were inappropriate activities and these are clear in the evidence that we provide in the report but it is not our role to go beyond that.

MR. STEELE: As I've said previously, in the seven years that I've been a member of the Public Accounts Committee, I haven't seen a worse audit, a worse case of misadministration. Yet, one of the starting features of this case is that because over the course of the creation of the administration program, there was a revolving door of ministers and deputy ministers responsible, nobody has stood up and said yes, it was my fault, I'm sorry. Who, in your opinion, is responsible for what went wrong with the Nominee Program?

MR. LAPOINTE: Mr. Steele, I'll have to say you're trying to get me out of my comfort zone with that one. (Laughter)

MR. STEELE: No, I'm not trying to get you out of your comfort zone but it concerns me that in a program so poorly administered, that not one of the seven ministers is willing to stand up and say it happened under my watch, it was my responsibility, none of the deputy ministers has stood up to say that. All we've had is the Premier standing up in the House of Assembly pointing the finger at three mid-level civil servants and saying, they made mistakes and we punished them.

Now I am concerned about what this says about the doctrine of ministerial accountability. If we can't find who is responsible for a program that has gone so badly wrong, then the doctrine of ministerial accountability is effectively dead.

I'm not trying to get you out of your comfort zone but I think this is a very important question for the work of the Public Accounts Committee in the Legislature - who is responsible for this mess?

MR. LAPOINTE: The way that I can answer that is from the point of view of my office. We look at government programs and the responsibility for those programs, from our point of view, rests with firstly, the government as a whole and then ultimately the Legislature.

The government creates and runs programs. We can't be going beyond that to specific individuals in government, or whatever else, but there's a general accountability in the governance structure.

MR. STEELE: One of the things I noticed when I was reviewing the thousands of documents that were released to us by the Office of Immigration was the almost total lack of involvement by ministers. Of the 10,000 documents we were given, there might have been

two directly to or from a minister. Almost always when there was a media inquiry, then the minister would get involved. Otherwise, it was very much hands-off.

Does your audit confirm that essentially there was very little hands-on involvement at the ministerial level in the Nominee Program?

MR. LAPOINTE: I don't think I can conclude that from our findings. As to what is the appropriate level of ministerial involvement or deputy involvement or director, that's not something that we would be looking at to judge.

MR. STEELE: I didn't ask you what's the appropriate level because I understand that's a matter for us to decide. What I asked you is whether, when your office has reviewed a mountain of documents, interviewed many people, I'm asking you the factual question of whether, in the course of your audit, it became apparent that there had been very little, if any, direct ministerial involvement in the creation and administration of the program in the early years.

MR. LAPOINTE: Frankly, I don't think that's a conclusion I could draw from the evidence we have. We were simply not looking in that direction to ask that kind of question and thinking of what we have, I don't think I could form a conclusion about that one way or the other.

MR. STEELE: You just have no opinion, one way or the other, that they were involved or they were not involved?

MR. LAPOINTE: Ministers have certain points in which they're involved, there are OICs involved, but what's the audit test for ministerial involvement in a program? I don't see how we could - it's not something that we go and examine.

MR. STEELE: In Phase One of your audit you expressed grave concern about the fact that your office had been denied access to a number of documents you felt were important for your office to see. Now that Phase Two has been completed, has your opinion on that changed?

MR. LAPOINTE: Well, you'll recall we did have, in the first phase of this, the significant restriction on what we could look at, and this committee did intervene in that issue with its subpoenas. But during the course of this phase, we were approached by Treasury and Policy Board with some proposals for a solution to allow us to complete this audit.

So yes, we did work out a solution that let us go and examine what we needed to do and that, in effect, we were allowed full access to everything that we needed to look at. But

I did point out that this solved the problem for this audit but didn't deal with the issue on the broader scale. I imagine at some point that issue will resurrect in another case.

MR. STEELE: Are you now satisfied you've seen every document your office needs to see?

MR. LAPOINTE: We saw everything we needed to see for this audit, yes.

MR. STEELE: Now, one of the issues that your office was exploring, as mentioned in your report, is the fact that it's not clear whether the Department of Economic Development followed the advice of Justice Department lawyers. Now that you've done your audit and had a chance to go into Justice, what's your opinion on that issue?

MR. LAPOINTE: I'll refer that one to Ms. Colman-Sadd.

MADAM CHAIR: Ms. Colman-Sadd.

MS. COLMAN-SADD: As we state in our report, although we were able to review the documents and therefore remove the scope limitation that we had in Phase One, we were still not able to conclude at the end of the day. We reviewed the information that was on file between Justice and Economic Development, and our conclusion is that there were limited written communications.

[10:30 a.m.]

We interviewed staff from Justice and from Economic Development and the results of those interviews are that there were two different perspectives on the extent of legal advice that was provided. After our interviews and looking at the documentation that was available, we were still not able to conclude whether Justice provided all recommendations, whether Economic Development took all recommendations. So we still are not able to conclude, although the scope limitation has been resolved because we were able to see the documents.

MR. STEELE: Does it not concern you that it appears the Department of Justice's legal advice was not on paper and in writing and clear for your office to see what that advice was or wasn't?

MADAM CHAIR: Mr. Lapointe.

MR. LAPOINTE: Our concern with this one was that even after seeing the information there still wasn't enough documentation for us to be able to answer the question. We did feel that in a case like this it would have been better had things been fully documented, rather than being verbal.

MADAM CHAIR: You have two minutes.

MR. STEELE: The first round is coming to a close so I wanted to take my last two minutes to do two things. First of all, I think it's important in this environment, where a report like this is delivered, to make sure that the people who have done good work on this don't let their work go unmentioned. I did want to take a minute to say in particular that there is nothing that we have seen in the course of this whole fiasco to suggest that any of the responsibility belongs to Elizabeth Mills, the current executive director. In fact, you can see in the documentation a turnaround when she came on board. I want to compliment also the Internal Audit staff who spotted all of the problems early on and their advice should have been listened to much earlier than it was. I want to thank you and your staff, as well, for doing a very difficult and unusual audit.

The final thing I want to do, if I may, Madam Chair, is read a resolution that I'm going to propose at the end of the meeting and it goes as follows:

Therefore be it resolved that the Public Accounts Committee recommend, in light of the Auditor General's Report on the economic stream of the Nova Scotia Nominee Program, that all nominees who entered in good faith into mentorships should receive a full refund of their economic contribution, less any salary received as part of the mentorship.

I propose that that resolution be discussed at the end of the question-and-answer session of today's business.

MADAM CHAIR: Thank you. Can we have a copy of that for the clerk, and copies will be made and circulated. The time has now expired for the NDP caucus.

I recognize Ms. Whalen for the Liberal caucus. I'm using my cellphone time - it's 10:28 a.m. and you have 20 minutes.

MS. DIANA WHALEN: Thank you very much, Madam Chair. Again, thank you for all of your hard work on this report, it's certainly extensive. As I had said in our earlier questioning period, I was disappointed that there wasn't more on the financial trust account, some of the actual figures provided and maybe some of the explanations about what the capacity of that account is in regard to the liabilities.

My concern for the trust account, itself, was really the reason that I had originally asked that the Auditor General be called in when this all came to light last October. The reason is there are many people who feel they have been treated poorly in the announcement of the residency refund option, I guess we're calling it. For that reason they have really, I think, made compelling cases that they should be listened to and that the offer of the refund was done in perhaps a fast and unconsidered manner because they have come early to Nova Scotia, were the ones who tested this program out, played by the rules through, and were not

considered when an option was offered to refund their money. Many of them, as you have pointed out in both of your reports, had very unsatisfactory mentorships. Thank heavens now we have the information that shows weaknesses in that program from the start really right up to the point it was cancelled.

I think that throughout our discussion we should be remembering a couple of things: the impact on the individuals - and I think all of us feel that we've had an opportunity here at the Public Accounts Committee to hear the individual stories of people who have come, and I know you followed that and interviewed many of them yourselves; and the second one is the impact on the reputation of our province. As a result of this very poorly conceived program, we have significantly impacted our reputation as a destination for immigrants and, I think, cast a shadow over the work that is being done now, which is much improved.

I know through the Office of Immigration, as was mentioned by my colleague, Mr. Steele, that there is a tremendous amount of work being done and has been done over the last couple of years to try to take what was really an ill-founded program that was just rife with problems and try to bring it back on track so that it could meet our goals of immigration.

I just think it's really important, as we look through this, to bear in mind that this program, which has been mentioned was under the control of seven different ministers, I think, and countless deputy ministers and staff, has really overall unfolded as a great embarrassment to our province. So it's a real concern to me as we go forward that we think about how we can make the best of this situation to go forward with the aims of the province, and that is to encourage immigration and make it a welcoming province for people who come here.

What we haven't done in your report is really determine if the trust fund that's in place has the capacity to allow the minister, allow whomever, the powers that be to make the decision to return funds to them and that's the motion, I believe, that's before us today. We've discussed that previously here at the Public Accounts Committee, it has been something certainly I have been calling on from the start as well, that we listen to the concerns of the people who tested this so-called pilot project and not leave them out. Can you comment first of all about the capacity of the trust fund as you found it when you did your audit and whether you can, I guess, further to that, make any extrapolations or assumptions about its capacity to refund all of the nominees who currently live and have stayed in Nova Scotia, who have participated in the mentorship program?

MADAM CHAIR: Mr. Lapointe.

MR. LAPOINTE: Certainly. I can tell you what we did in our limited review of the fund. We were concerned with doing at least a global test to ascertain that the amount in it is what you would expect to find. For instance, if you take the number of nominees who were accepted, times the amount that they paid in, and subtract the amounts that you would expect

to be paid on that basis to agents and mentors, we were able to find that yes, regardless of what transpired in the account, the amount that is in there is within an insignificant deviation of what you would expect to see. So there weren't, from what we could see on that basis, large amounts of missing funds.

What we could not do was to verify in an audit sense that everything that transpired within the account was appropriate. One of the reasons being is we didn't have access to a lot of the documentation supporting it since much of it is in corporate records, to which we don't have access.

The other factor affecting your question is that there are still at this point tremendous numbers of uncertainties about this account. A lot of the amount in the fund is currently subject to lawsuits and so the ownership of the funds is in dispute, so are these funds available or not? There are elements on the funds whose ownership, as far as we could see, is uncertain and we're not sure what the outcome would be. For instance, if funds are allocated in there for agents and there were no agents, the $20,000 is owed by whom? If at certain points $18,000 was paid and not $20,000, there's $2,000 that you have to wonder then, whose is it?

There are numerous such uncertainties in the funds as to ownership, as to availability and, in many cases, as to information. We don't have any way to ascertain the number of people who are eligible for refunds under different scenarios, for instance, under the one that's being proposed or any other. So it's impossible for me to answer, if refunds were paid out, whether the funds are there or not. For those reasons, there are too many uncertainties.

MS. WHALEN: Doesn't it suggest then that there was not even appropriate record keeping, if you can't determine who has claim to the funds that are in there and what the liabilities or obligations of the government are? It alarms me that you can't even make a rough estimation of the claims that will come forward on that account. Perhaps you could give me a number - I understand there's roughly $70 million in the total trust account. I think it's important for all of us to remember this is the money that came from immigrants, it's not taxpayers' money, it's money that they contributed to the province and to moving to Nova Scotia and making this their home. But of the $70 million that's in that account, can you say how much is in dispute - I believe it's the interest that's in dispute with Cornwallis, that would have to be set aside for that concern - is there a figure, roughly?

MR. LAPOINTE: The interest in dispute, I believe we have, as far as we know, $190,000, but there is a dispute about agent fees. The $20,000 that I mentioned, there are cases where Cornwallis is claiming some of those. There were fees that were returned from a lawyer which Cornwallis is claiming as well. Frankly, at this stage I'm not too sure if there's anything more of what the total amounts would be. Of course, once there's a claim, then they start disputing about what amount has been claimed. Those are roughly the amounts we know of that are subject to lawsuits at this time.

MS. WHALEN: Right. So you mentioned $190,000 in interest, that's the total interest in dispute? I know that in your report, Paragraphs 93 and 94 talk about the unpaid agents' commissions - I'm talking about interest that would have accrued in the account when Cornwallis was in charge of it and felt they had ownership of it.

MR. LAPOINTE: I should clarify, it's the interest which was taken out and returned which is in dispute. If you were to calculate all of the interest accrued in the account at that time, it would be several million.

MS. WHALEN: Several million, that was what I was looking for, the bigger picture. Whatever the government decides to do they're going to have to make provision for whatever the courts decide, so they'll have to set aside some of the monies that are in dispute.

MR. LAPOINTE: My information at this point as to the details of the lawsuits is quite spotty, because we have simply not gone into the lawsuit area.

MS. WHALEN: Again, I'm just concerned that there is no information on how many people have a claim on the money to be returned to them. We've now had a full year, from October last year to now, to look at the refund option, since that was introduced. So there should have been a year of people applying for those refunds and we should have a clearer picture of who's really out there that has a claim on them. There is a time limit on when they can apply, so that should also give us a better sense. Can you say that within a period of time we would have a clearer sense of what's going to be required to meet our obligations?

MR. LAPOINTE: No, I don't think I could say that over a period of time we will have that information. I think it can presumably be done, but that would be a management issue to try to resolve those questions. At this point we're not going to do any further work to try to identify those amounts.

MS. WHALEN: You're not going to?

MR. LAPOINTE: No.

MS. WHALEN: I think it is an area where your expertise would be welcome because what I'm getting from you is the records are incomplete and there isn't a good basis on which to go forward, and even to make a policy decision, if you don't have the right records and understanding of what's outstanding. So do you think the department has the capacity to do this?

MR. LAPOINTE: Oh, yes.

MS. WHALEN: The Office of Immigration?

MR. LAPOINTE: If not the Office of Immigration there's certainly the capacity in the Public Service for a very sophisticated financial analysis. Yes, if the will is there, any of that kind of analysis can be done.

MS. WHALEN: From your review of the trust account, do you think there is adequate information in backup - certainly you said you could trace the dollars in and out and it matches, it reconciles, but is there adequate background information to support that account, I mean in terms of liabilities and in terms of the total picture?

MR. LAPOINTE: I'll pass that to Evangeline Colman-Sadd.

MADAM CHAIR: Ms. Colman-Sadd.

[10:45 a.m.]

MS. COLMAN-SADD: Thank you. I guess that's a difficult question in certain ways to answer because when you say adequate background documentation, I think the problem with some of the information is that, as an example, when we looked to see that yes, there was a payment to a mentor company, or there should have been a payment to a mentor company, I think based on the results of the mentor area of our audit you can see that we've concluded there were issues with some of the mentorships and with whether or not they truly met established program criteria. We didn't go to that level of detail when we looked at the trust fund transactions. We didn't look at, you know, a payment went to mentor company A, does that appear to have been a valid mentorship? Was the nominee satisfied? Did they get what they wanted? Did the mentor company get what they wanted?

Then there's the question of agents. Many of the payments would have been made to agents who are overseas. Were they truly agents that completed work on the nominee's behalf? We just don't have that level of information.

MS. WHALEN: I understand that but I find it really amazing that we don't have the information on how many nominees are here in Canada who are entitled to the full refund option and how many would be here meeting the requirements who are not entitled under the current refund option that's on the table.

We're talking about people and knowing what people have a claim on it, not whether they were appropriate or inappropriate or whether those people even had met all the requirements but the paperwork says they're here and there's now an obligation to them. That's what I find sort of stunning, that we haven't been able to keep track of the people.

MS. COLMAN-SADD: Well I guess in one of the instances, if you look in our sample selection area of the report, we referred to the fact that we were unable to find some of the nominees. So is it possible that those individuals are living in Nova Scotia? Yes. Is it

possible that they're elsewhere in Canada or perhaps not even in Canada? It is, so it's very difficult to determine the number, for that reason. We just simply do not know where some of these nominees are.

MS. WHALEN: If you were designing this in the future, would you put greater controls in on the tracking of the individuals?

MADAM CHAIR: Mr. Lapointe.

MR. LAPOINTE: I think I can answer that and my answer is yes. This is a conclusion I came to quite early on in the program, that we felt there was a requirement with the federal agreement that nominees be kept track of as one way to judge the success of the program. If you meant to attract people to Nova Scotia and you want to know whether you were successful, you should then know whether people are, in fact - you know after a period of time or even at all - living in Nova Scotia. So that would serve many other purposes as well.

MS. WHALEN: Exactly. Do I have just a couple of minutes?

MADAM CHAIR: You have six minutes.

MS. WHALEN: Oh, that's good. I wanted to talk about the decision to cancel the mentorship program and move to this refund option - the residency refund option - instead and how, in your review of this whole program, that decision appeared to be arrived at.

Before you answer, I'd like to say that because they didn't consider the people who were excluded from the refund option, I think that it appears to have been arrived at in somewhat of a hurried fashion. Can you describe what your documentation and your review showed as to the decision - what led to the decision to just say stop. I mean there are so many things but why didn't they consider the people who were not included?

MR. LAPOINTE: I guess I can say to that that we didn't look at what would be the decision-making behind making that kind of decision. This is a policy decision which we don't look at. We look at once a decision is made, how is it then designed and implemented.

For clarification I should add that the program has not been actually cancelled. It is still an option and there are, as far as we know, quite a large number - according to the records, anyway - of nominees who still have not landed and who could presumably opt into the program. So it still exists as a program and people have two options.

MS. WHALEN: It's kind of stunning that it still exists as an option, in my opinion, given the myriad of problems and significant, deep-rooted problems that this program has, and the fact that the controls were so insignificant that it was rife for abuse. It has harmed a lot of people, as has been said, a lot of people put their life savings in that fund, coming here

with a purpose to gain experience and gained nothing. They've come here and had a very difficult time to establish themselves, the mentorships didn't help in the least.

So the fact that it's still being offered after so many stories of abuse have come out, it seems stunning that it's still in place. Is it your understanding that some people are still taking that option?

MR. LAPOINTE: We don't actually have any information as to what is being selected right now but we do know that there are a lot of people still in the pipeline and we do know that the option is there. As to how people are going at this point, I can't really tell you.

MS. WHALEN: You indicated in the report that about one-third of the companies that you looked at were not really appropriate for mentorship companies, that they didn't meet the criteria. I don't have the exact number in front of me, but about one-third.

Could you tell me who did the approval of those companies? How they were - when they submitted an application, who provided the approval that they met the criteria to be in the program?

MR. LAPOINTE: Certainly, I'll defer that one to Ms. Colman-Sadd.

MS. COLMAN-SADD: When mentor companies applied to participate in the program, there was initially, at the time that Cornwallis would have been involved with the program and assisting in the operation of the NSNP, there was a committee of three individuals: two from the province who work in the economic development area, and one staff member from the company Cornwallis. They would have reviewed the initial applications. Once Cornwallis was no longer involved after the province's contract with them ended, the original two individuals from the economic development area in the province continued to sit on the committee, as well as various staff members from the Office of Immigration.

MS. WHALEN: So Cornwallis, then, no longer sat on it once their contract was stopped.

MS. COLMAN-SADD: That's correct.

MS. WHALEN: It was all civil servants, then? You said one from the Office of Immigration, one from Economic Development.

MS. COLMAN-SADD: The economic development field in the province.

MS. WHALEN: So NSBI, or something similar?

MS. COLMAN-SADD: Similar, yes, they work in the economic development area.

MS. WHALEN: And how many members sat on that committee?

MS. COLMAN-SADD: There would have been three originally - two provincial and one Cornwallis. Then afterwards, I think there still would have generally been three. There may have been meetings where there was an additional individual or two present.

MS. WHALEN: The number of companies that they allowed to be approved that didn't meet the criteria suggests that there wasn't any oversight on their activities. Were they the final word on who was in or out? Was there an opportunity for the Office of Immigration to come back and question their decision? Or for a minister or a senior bureaucrat to question that decision?

MS. COLMAN-SADD: I guess presumably anyone can question a decision, whether it's a final decision or not, but the process that was generally followed and that would have been involved with the NSNP was that it was the Business Review Committee's role to assess the applications and to determine whether or not the company met the program criteria, whether or not they felt they would be an appropriate mentor company.

MS. WHALEN: Was there any indication in the companies . . .

MADAM CHAIR: Order, the time has expired. I recognize Mr. Dunn for the PC caucus. You have 20 minutes.

MR. PATRICK DUNN: Thank you, Madam Chair. I commend the auditor and all the staff for the work that you've done in this particular file with your findings, conclusions and your observations.

Just two or three questions: Mr. Lapointe, earlier in the program you mentioned that this particular program was not your typical government program. Could you possibly expand on that and suggest why this is not your typical program?

MR. LAPOINTE: I guess what I was getting at was that I would not hold this particular program as being representative of government programs, generally speaking in Nova Scotia, in that the level of deficiencies and weaknesses and so on that we found here are greater than we normally find if you look at our other reports that we issue. So that if you were to look at this and say well, are all government programs like this one? I would say no, they're not. This was exceptional for us, in terms of the findings.

MR. DUNN: I want to revert back to some questions that arise with regard to the RCMP. I know you've exhausted a lot of the information with regard to the questions and I know your job is the audit of the program. But as the RCMP pursue possible investigations,

from your past experience with other files, what is the normal process, as far as the outcomes of their investigations on some of the items that were passed over to them? Who they report back to, if they report back and are you privy to their findings, your office?

MR. LAPOINTE: I guess what I can say to that is, how I understand they operate is completely independently and they would not be reporting back to us, or as far as I know to anyone else, as to what they do with the information or how they proceed. So that once something is out of our hands and into theirs, then it's completely in their hands and it's up to them to decide what to do. We are out of the picture at that point.

MR. DUNN: The next question is dealing with, I noticed in your report there were several of the nominees where there are deficiencies in the criteria with regard to language barrier. I would be curious to know what kind of explanation Cornwallis had with regard to some of the individuals who did have this language barrier which certainly would be quite a deficiency in a successful outcome.

MR. LAPOINTE: The findings on the language barrier came from our interviews with them and so it was our direct findings in speaking with these individuals and which we reported quite clearly that a certain number could not speak to us at all and some of them could only speak through interpreters, so that is the basis of our finding. As to explanations we received, we did not receive any explanation from Cornwallis in that they are not speaking to us.

MR. DUNN: With the program still in place have the criteria and controls changed? Have they been improved?

MR. LAPOINTE: There were improvements made to the criteria for mentors. We noted they added others to do with financial viability of companies on the mentor side. On the nominee side, there are no new applications being taken right now so I don't know what would be the case if these were coming through. Would that be a correct characterization? Yes. So I can't really comment on current practice in that that aspect of it was frozen in effect.

MR. DUNN: Thank you, Madam Chair.

MADAM CHAIR: Thank you. I recognize Mr. Porter. You have until 11:08 a.m.

MR. CHUCK PORTER: Thank you, Madam Chair. I'll go quickly then on a number of questions. Just receiving the report this morning, I'll reference paragraphs, perhaps, Mr. Lapointe, when we go through to make it a little easier maybe as to where I'm speaking about.

The first question though, without doing that, will be just a follow up on a tracking question with regard to immigrants or nominees throughout the country or wherever they may be once they arrive and go through the program successfully or otherwise. You said you would recommend tracking them - how are you going to track them? Are we talking about an ankle bracelet or something here? How would we possibly ever be able to track them? I'm kind of curious on that one.

MR. LAPOINTE: What I'm suggesting is a program environment that people maintain on a current address. We have, for instance, drivers licences . . .

MR. PORTER: We do.

MR. LAPOINTE: . . . and we have addresses on them and they must be maintained. If they're not, the driver licence can be revoked. There are many instances in which in order to participate in a government program, the government requires to have some information about you of that nature and that's all that I am suggesting, only at that level.

MR. PORTER: And it would be somewhat difficult, I would think, to do some of that. I think we've already seen that it has been difficult to track those who have come, regardless of where they might have ended up within the country. I wonder at the same time - thinking it reasonable to do our very best, as you've just suggested, to maintain knowledge of their whereabouts - do you think any of them would see it as a rights issue where there would be groups that would see this as a human rights issue?

We don't trace average Canadians or Nova Scotians or Quebecers or whatever they may be anywhere in the country. This is Canada, we have the right to travel freely. Would there be a rights issue that would arise and then, once again, it would come back perhaps to any government to say, now you're looking to penalize or making it difficult again, not helping to attract immigrants to your province and/or to your country? I'm kind of curious again on your thoughts to that.

[11:00 a.m.]

MR. LAPOINTE: As to human rights issues, this is really not in my area of expertise . . .

MR. PORTER: I appreciate that.

MR. LAPOINTE: But from an audit program point of view, what I see is that a number of government programs, in all jurisdictions, require people to keep current information as part of the program - not particularly private information, but address and phone number type of information. That is all that I am suggesting.

MR. PORTER: We've talked a lot of about this over the course of many meetings that we've had with your department and thank you for those. There were a number of nominees that went through, 600 or so. How many of these that went through successfully, and did well as the program had suggested, are there in that number? How many of them did you talk to by way of getting good reports versus - I know that we had quite a contingency in here one day and interviewed 12 or 15 or whatever that number was, I just forget right now, but somewhere along those lines.

MR. LAPOINTE: What we have was, of the sample that we had, only a percentage identified problems and some did not. I might refer that to Ms. Colman-Sadd after more details on the sample results.

MR. PORTER: I guess what I really want to get at and be clear here was that there were people who went through this program successfully and spoke to it as such. We listened to other people talk about how poor this program was. Yes, there were some administrative deficiencies - we've seen that in your report, that's clear. At the same time there were people who were successful in coming to this country and becoming citizens and immigrants and taking part of these programs. We have heard other people in this room state this was a poor program and I think some of those people that came through and are happy to be in this country today would disagree with some of those comments. I'm just kind of curious as to how many of those folks that you spoke with may have reported such? If you don't know, that's fine, I just wanted to throw it out there.

MR. LAPOINTE: In terms of numbers, I can say that we had, in different parts of our discussions with them we had some reporting positive results and some reporting not. I don't know if I have offhand, specifically, but yes, we were focusing on our role being to find particularly where there were problems with the program, that we can recommend improvements and identify them to people to deal with.

MR. PORTER: To do that though, would you not have to also find the things that worked?

MR. LAPOINTE: Well, in fact, we don't have to find them all . . .

MR. PORTER: No, I'm not suggesting all . . .

MR. LAPOINTE: . . . but we're finding percentages. So we say that a percentage, for instance, of mentors did not pass the test to qualify while the other percentage did pass in fact. We wanted to look at the other side of our percentages as well and as we say, 24 out of 41, for instance did not pass. Well, the rest of the 41, in fact, by our testing did pass and that's a positive result.

MR. PORTER: Thank you. I just want to move along quickly through some of them knowing our time is short and I appreciate your answers. Paragraph 39, we talk about funding, ". . . a risk that significant deposits such as this could have originated from illicit sources." At the same time could it have come from folks like family? How were we not able to quite determine where? You speak to the fact that it could have come from - can you elaborate on that just a bit? What illicit sources?

MR. LAPOINTE: We can't say what illicit sources. The point we were making with this is that the requirement of the program is to have documentation for the source of funds to identify what it is, to have that understanding. The risk of that is that some of the funds could be illicit, they could be not owned by the individual. It could be a loan, it could be any number of things. You want to know that these are actually part of the individual's net worth. What we found was that if there was, in some cases, no work done to ascertain that then we have no knowledge about it and what we were here pointing out was the type of risk that you run into.

MR. PORTER: Page 15, Paragraph 55 - I'm just going to touch on it briefly and then I'm going to flip quickly. It's in regard to the agents: "We also identified several instances related to one agent in which the nominees indicated he did not assist them with their files, yet he received payments as their agent."

In carrying on over to Paragraph 64, it talks about the concerns with lawyers representing certain nominees. We talk about certain lawyers and I know you don't name them for obvious reasons in your report and you can speak to that if you like - why you don't do that - or some others may have that question as well. In all of these cases as is listed here, nominees indicated the lawyer did not perform services on their behalf and they were not aware that the agent had received commissions of $18,000 to $20,000.

This particular lawyer that we are speaking of here received these payments. It references eight cases - were there only eight cases, do we know? Can you explain more of the payment for agent fees? We've got here the payment of agent fees on these cases appear to be inappropriate and the return of some of these fees is irregular. So, did he only represent - or she, whichever it is - only represent eight nominees? I need you to speak to that a little more clearly; there's some gaps there.

MR. LAPOINTE: Yes, I can speak to that. We are aware of eight nominees and that is what we followed up on. We can't say that there were not more. This is the information that we came across and we certainly didn't audit for completeness so yes, there could be others.

As to the payment of the fees, our conclusion as to the inappropriateness revolves around the fact that the evidence is that the agent did not actually do the work for the

nominees and they all claimed, and the evidence is there to support, that they filed their own files.

MR. PORTER: Okay, in this next paragraph, 65, "Despite this Cornwallis told nominees and others that an agent was required." Why would Cornwallis tell them that? Is there any indication in the reports that you've done? Did Cornwallis profit from doing that, do we know?

MR. LAPOINTE: We have no indication of a profit in those cases. The funds went to the lawyer agent and . . .

MR. PORTER: Is there a relationship between Cornwallis and the lawyer that looked after all these people?

MR. LAPOINTE: There's no direct relationship here that we can see. This is a legal firm.

MR. PORTER: So Cornwallis recommended this lawyer several times. Why then, did they recommend this particular lawyer? Were there findings to state why? Why didn't they recommend others?

MR. LAPOINTE: That is something that we don't have evidence on. We can't speculate as to all the reasons behind this at this point.

MR. PORTER: There's an interesting part, in Paragraph 71 you talked about four nominees and I believe it's an e-mail that states a little bit about the forms, requiring a lawyer again, and I would ask why would Cornwallis staff do this? Were they not aware of the rules? Did Cornwallis profit again, do you know? Did Cornwallis profit in some way from assisting or recommending a certain agent or agents be used?

MR. LAPOINTE: We don't have evidence of profit of Cornwallis in these cases and we also don't have any evidence as to why these statements, in Paragraph 71, for instance, were being made.

MR. PORTER: And in Cornwallis, just to be clear, Cornwallis did not co-operate with you, by way of your audit, is that right? Am I clear on that?

MR. LAPOINTE: Well, to clarify, initially they stated that they would co-operate and yes, they did allow us to go in and started to - we had staff on the premises and we started to look at some documentation which they were providing and we started to then ask questions as we do in an audit, and they changed their minds on the co-operation.

MR. PORTER: All right, so said lawyer paid in payments - Paragraph 79, "Of $116,000 in payments made to this lawyer over a period from May 2, 2003 to March 20, 2008, $79,935 was returned in January. . ." Why was this? Did this lawyer feel the heat, some pressure on him by way of the investigation? It had been almost five years, some of these cases. A lot went on, why would he return the funds?

MR. LAPOINTE: I have to say that that is actually at this point one of the questions that we have and we don't have that answered.

MR. PORTER: And Paragraph 80, I guess, you know, in your last sentence that, "Subsequently, the lawyer returned $15,000 to the trust, keeping the remaining $5,000 as his fee." Fee for what?

MR. LAPOINTE: Well, we can't say.

MR. PORTER: Okay, and just one here - I know I'm going through them rather quick but I know my time is drawing near as well. We talked in Paragraph 74, I guess, about the lawyer's access is my question. If they were not aware of the file, they were signing blank nominee forms, and you've got in Paragraph 74 that, "It is not clear who added the lawyer's name as the nominees' paid representative on the 5476." How would lawyers access the file, to begin with, to sign it?

MR. LAPOINTE: Well, Cornwallis was managing the program and managing the files, so Cornwallis had to provide the lawyer access . . .

MR. PORTER: So it's not really clear, then. If the nominee didn't add the lawyer's name to that form, who else had access to the form?

MS. COLMAN-SADD: Just to clarify, it's not necessarily the lawyer's signature, his name is just written on the form. So it's not necessarily that the individual had to have access to sign the form. This is a form, it's a federal immigration form, it just declares who someone's paid representative is.

MR. PORTER: All right. At the same time, though, who else would have had access to the form to add the name? I guess that's what we're sort of wondering here.

MR. LAPOINTE: The few people who had access to the files, assuming that the nominee didn't know about it, that would have been Cornwallis and then the lawyer.

MR. PORTER: It becomes pretty simple then, Cornwallis just handing out $20,000 payments for fees that were not rendered is certainly how it appears in this case.

MR. LAPOINTE: That is the appearance that we're reporting here . . .

MR. PORTER: Is that a fair statement from a man who has audited this in great detail?

MR. LAPOINTE: Our conclusion was it would appear that payments were being made for services that were not rendered and that is why we conclude these payments appear to be inappropriate.

MR. PORTER: And the nominees themselves help to conclude that by saying they were not aware, if I understood some of the conversations today. In your interviews with some of those nominees, they state they were not aware that there was a fee of any amount going to an agent.

MR. LAPOINTE: Well, yes, there are variations in the degree of awareness, and so on, but the consistent issue in this case is that nominees were not aware of this agent having done any work for them.

MR. PORTER: Okay. Was the lawyer aware that his name was going on the form?

MADAM CHAIR: Order, the time has expired now for the PC caucus.

I recognize Mr. Wilson for the NDP caucus. The next round is 12 minutes per caucus.

MR. DAVID WILSON (Sackville-Cobequid): Thank you, Madam Chair. I guess through this whole process over the last number of months - I can't remember exactly how far back we've been talking about this program - the one thing that seems to be a constant is the fact that your office has come across many roadblocks, including this committee, on limited access to information to do your audit and for our committee to evaluate this government program.

Would you agree with that, that it has been an issue with this phase, and the previous phase, that you haven't had that access to information that you need to finish the audits to the best of your ability or to the best ability of your office?

MR. LAPOINTE: I would certainly say that throughout this whole experience access to information has been a bit of a challenge, and it has very considerably. As you know, there was the issue with privileged information earlier on. Now, we've worked on these things, as has the government and the departments and this committee, and resolved some of them but it continues to be a problem through to the end.

Certainly the access to much of the information which is outside of government was a considerable limitation to us. It was very difficult for us to go too far in some areas where the files and the information, for instance, were in Cornwallis' corporate records, or where we needed to speak to individuals.

We're now moving on the edge of our legislative authority and either the people have to volunteer to speak to us or we have to subpoena them and so on. So certainly in this particular audit, access issues have been a challenge and limiting. We've overcome some and not others.

[11:15 a.m.]

MR. DAVID WILSON (Sackville-Cobequid): I think that seems to be something that continues to come up, as a member of this committee dealing with government programs that are delivered by private companies. When government decided to outsource a program or enter a P3 agreement, we find ourselves, as a committee - and I'm sure your office - limited to the information that you have access to. So do you support opening up or strengthening the ability for your office, for example, to gain access to information when government enters these outsourcing agreements or P3 projects? So do you support the fact that we need to look at your office having the ability to go into companies' records to do an audit that they have agreed to or entered into an agreement with the government to provide a government program?

MR. LAPOINTE: In fact, this was actually a recommendation that I made in a previous audit. We've run into this in other audits, and continue to, where services are outsourced. We are now on that grey edge of our audit mandate and sometimes it's difficult to tell whether we have access to an organization or not and we get into disputes.

I have recommended that certainly where contracts are entered into with the private sector - by private sector, I include non-profits or anybody outside of the government entity - where contracts are entered into, the access provisions need to be very, very carefully thought out. It's not just a case of ensuring in the contract access to this, for this office, but presumably access by the department, access by Internal Audit. You have to consider what would be the appropriate oversight mechanism that you want in that contract. Certainly audit oversight is one that should be routinely built into that type of contract, which I think would solve a lot of the disputes that happen in the future in these areas.

MR. DAVID WILSON (Sackville-Cobequid): I would agree, and I think government needs to recognize that, because we know for a fact that this current government has an appetite to look at future P3 projects in many departments throughout government, especially health care, where it's a concern of mine.

So you've stated in Phase Two of your audit that there were significant deficiencies and not enough controls in place, which is the responsibility of the government - correct?

MR. LAPOINTE: Yes.

MR. DAVID WILSON (Sackville-Cobequid): So when you look at this program and your audit and the information that you provided in Phase Two, it seems that the area there is the most concern around is the payment, the fee that was given to agents for their preparation of the application.

It seems extreme to me that $20,000 is the number that is placed and the fee charged to an immigrant to have an agent, or somebody, go over, review, and from what you've said in your audit, didn't even really have any hands-on to be charged to an immigrant coming to this country and to our province. So who suggested the fee structure for this program? Are you aware of who actually suggested the fees?

MR. LAPOINTE: Yes, it came out of the early discussions in the program between Cornwallis and the province. As to specifically who would have said it first, I think for us it would be hard to say, but it was a joint discussion between those two.

MR. DAVID WILSON (Sackville-Cobequid): So the government would have known that $20,000 was going to be charged to immigrants who enter into this program. Should there not have been strict controls, knowing that $20,000 for this fee for the work that was supposed to be done, should have been in place at the time when they agreed to what the fee structure should have been?

MR. LAPOINTE: Our conclusions on this were that we didn't make recommendations specifically on that issue because this was an ongoing program but in the past the controls on all of that type of spending were weaker or sometimes insignificant. The criteria, the definitions, all the various roles being well-defined, and what has paid for what, were insufficiently thought through and insufficiently documented.

MR. DAVID WILSON (Sackville-Cobequid): And it leaves the question, I guess, government is the only one that could answer it, is the fact of why we didn't see those controls, is it because this wasn't taxpayers' money, it was money coming from the pockets of the applicants? I guess government will have to answer that, so I won't ask you that question.

During your audit did you see any reports or updates from Cornwallis that were given to government on how the program was running, if there were any problems? Through your audit did you come across any reports like that?

MR. LAPOINTE: I'll refer that to Ms. Colman-Sadd.

MADAM CHAIR: Ms. Colman-Sadd.

MS. COLMAN-SADD: Thank you. During the time that Cornwallis would have been involved in assisting with the administration of the Nova Scotia Nominee Program, there

were quarterly reports that they would have provided to the province on the program, which we did review when we did our work on Phase One. The reports would have been fairly high level, would have talked about the number of nominees coming and that type of thing.

MR. DAVID WILSON (Sackville-Cobequid): So during the review of those reports, was there any indication from Cornwallis that there were some questions or concerns around the fee structure or concerns from nominees about the amount of money being charged for the services they were receiving from some agents?

MS. COLMAN-SADD: No, there were not.

MR. DAVID WILSON (Sackville-Cobequid): I'll pass the rest of my time on to my colleague. Thank you.

MADAM CHAIR: Mr. Steele.

MR. STEELE: On Pages 11 and 12 of your report, Mr. Lapointe, you say something that I want to make sure I understand. You say first of all that in your office's opinion, 17 of the 51 nominee applications that you reviewed should have been rejected. Then over the page you say an additional 33 had insufficient information to meet the program criteria. Now, if I do the math right, that means in your office's opinion, 50 out of the 51 files you reviewed should not have been approved when they were, is that correct?

MR. LAPOINTE: If you're going technically by the book and simply ticking off boxes, yes or no, that would be precisely the case.

MR. STEELE: Then on Page 25, when you're talking about the approval of the mentorships, you indicate that in your office's opinion, 24 out of the 41 files you reviewed did not meet the criteria and should not have been approved, is that correct?

MR. LAPOINTE: Yes.

MR. STEELE: And so we have the situation where almost none of the nominees should have been approved, at least when they were, and the majority of the mentors should not have been approved at all. The purpose of this program was to bring immigrants to Nova Scotia, introduce them to quality mentorships where they could learn the ways of Nova Scotia business and integrate seamlessly into Nova Scotia society, going out into business on their own and living happily with their families in Nova Scotia. Based on your audit and those numbers that we've just gone over, how many of the nominees, in your opinion, had that kind of experience and met that description?

MR. LAPOINTE: I would think that would be very, very difficult to estimate. You're asking what was the percentage in which the program worked. We don't really have

sufficient statistics on that, that is quite hard to get at. Now, the fact that if someone in an application wouldn't necessarily pass the criteria is not a statement that they could not come in and be a successful candidate and have a successful mentorship, because it speaks as well to the criteria. One of the reasons we split our result into two was that some criteria were quite straightforward and some, the 33, we thought were frankly difficult to administer in the first place, so I'm not sure how strong a conclusion we can draw about those. Even someone who failed completely could have come in and had a good mentorship experience.

MR. STEELE: Right and I agree with you in that, but they set up the criteria, didn't follow them and if somebody had a successful experience and seamlessly integrated into Nova Scotian society, it's not because of anything the government did, it's almost pure luck.

Getting back on the question of refunds, when you met with us on June 11^th, you had indicated to the committee that you had no opinion one way or the other on whether refunds ought to be offered. Is that still your position today?

MR. LAPOINTE: Yes, it is. That to my mind is a policy decision as to how to create a program or to run a program, and that is for the policy-makers to decide, not for us.

MADAM CHAIR: Order. The time has now expired for the NDP caucus.

I recognize Ms. Whalen for the Liberal caucus. You have until 11:32 a.m.

MS. WHALEN: Thank you. As we were interrupted the last time, I was asking about the business review committee and the mechanism that was put in place to screen companies that would meet the criteria and provide mentors for the incoming immigrants. I wanted to ask you again whether or not there was any evidence that ministers had any involvement at all with that committee, whether there would be anybody higher than the three members that were there - I'm looking specifically for ministers.

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

MADAM CHAIR: Ms. Colman-Sadd.

MS. COLMAN-SADD: Certainly not in the information that we had available to us and in the information we reviewed during the audit. We did not have any instances where there was any indication of ministerial involvement in that committee, no.

MS. WHALEN: Were there any letters at all from MLAs, perhaps, that were supportive of companies that were applying for that role?

MS. COLMAN-SADD: I honestly don't have that level of detail on each mentor company applicant's file. There may have been, I'm not certain, but I do know that we didn't have any indication of ministerial involvement.

MS. WHALEN: Okay. In the report you talk about the interviews that you had with the nominees and their understanding, which we had heard here as well directly from them, that they would be given a list of companies from which they could choose the best match or have even an opportunity for them to interview these companies to find the best opportunity for themselves, in terms of getting the experience that would match with their own background and the business background that they brought with them. Time and time again they were told they didn't get that. I don't know how many you spoke to, but only one said they were provided with a list and there's no indication how long that list was - it might have been a list of two.

From our understanding, talking to people who have come in here, they were really given one company and told you better sign, time is running out, you have to sign and pick a company and here's the company. Could you just elaborate a little bit on the business review committee and why there was no list available for the immigrants?

MS. COLMAN-SADD: I don't think it's entirely clear as to why there was no list available. I do know that is a frustration that some of the nominees we interviewed expressed to us. I think as the results of Phase One indicated there were certainly some difficulties in terms of attracting companies and whatnot to participate in the program to begin with. I don't think there were as many mentor companies as perhaps had been anticipated at the outset of the program. There were roughly 200 approved over the course of the program and as for why there was no list provided, I can't speak to that, I'm not certain.

MS. WHALEN: From your review of the program and the parameters as they were laid out to immigrants, was it clear that they were promised a list?

MS. COLMAN-SADD: Nominees certainly informed us that they were promised a list. I don't recall that we have anything as an example, in writing, that specifically refers to a list, but nominees would have informed us of that.

MS. WHALEN: There were not enough companies and I think you've hit that on the head as well that, in fact, the program failed largely because there weren't enough companies that were adequate and properly matched at the end of the day. I wanted to ask you about the term "pilot program" because in the government's answer to your report, at the back I think they refer in two places that this was a pilot program. In fact, I think it's worth noting their words on the pilot program that they indicate it was not meeting the needs of the nominees - that's toward the end of the last sentence there.

They said in October they realized it was not meeting the needs of the nominees and yet you indicated earlier today the program is continuing, it's still offered, and presumably the staff of the Office of Immigration would still be outlining that option to people arriving. With your knowledge of the program today, would you suggest that it should still be an option when the government itself is saying it did not meet the needs of nominees? That's a pretty blanket statement that they provide.

MR. LAPOINTE: The residency refund is described as an option. The other option is the existing program. In fact, our conclusion on the first phase of the audit at that point was that there were sufficient weaknesses in this program, that it needed to have a considerable amount of scrutiny and consideration if it was going to continue in its form. Rather than a number of small recommendations, we made a large one - that it be subjected to a full program evaluation if it was to continue. If it was not, we are now recommending that the deficiencies be reviewed, the ones we've noted, and lessons learned for other immigration programs at the very least.

[11:30 a.m.]

MS. WHALEN: A whole year has passed since the program was changed and now a residency refund option is on the table. Is there any evidence that any kind of deep systematic change has happened with the offering of mentorships? I understand it took a long time for you to do your review as well, but still, the program has continued, people are arriving.

MR. LAPOINTE: No, I don't really have a lot of information on whether there is any take-up of the existing program at this point. If it theoretically exists, I can't really tell you right now because that's not what we are looking at - whether, in fact, it's an active program.

MS. WHALEN: Maybe that's a question we have for another day with other people. I'd like to ask you again about a pilot program because I know you're very familiar with auditing many kinds of programs. What would you consider to be basic criteria in setting up a pilot program if you were going to pilot - meaning you're testing something?

MR. LAPOINTE: A pilot program I would describe as one that is established for a period of time in order to test a practice, after which you review the success or failure of the program, make changes and make your decisions at that point.

MS. WHALEN: So in the case of this program, did you find that there were any measures of success, guidelines, or an actual attempt to measure the outcomes? This program existed for five years, that's kind of an extensive pilot to begin with if we accept that term.

MR. LAPOINTE: Well, in fact, as I mentioned in our recommendation in the first phase, an evaluation should be conducted at this point. There have been reviews and

evaluations ongoing, I can't say nothing has been done. We list a number of areas where the Office of Immigration has attempted to make improvements. This is not a systematic review, which is what I'm recommending, but it is a number of attempts at various stages to look at areas, make the changes and keep going.

MS. WHALEN: What I'm suggesting is that five years have passed, there was no time limit set for this program for a review, no measurements were put in place, there was no oversight to test it as you would any pilot program. We've seen this with numerous programs in government, and it's wrong to use the word "pilot" because an agreement was signed with the federal government and this was the program that was instituted. None of the controls were put in place that you would see around the oversight of a pilot program. Can you comment on that?

MR. LAPOINTE: Yes. Beyond what I've said as to the use of the word "pilot" there's not a lot that I can say. It's not a technically defined term and you can call a lot of things a pilot program.

MS. WHALEN: I think it's an abuse of the word because I think it's a way to hide behind something that appears to have had more oversight than, in fact, it ever did.

I wanted to ask you about the company that was actually resident in New Brunswick and received approval to be part of this program. It is, unfortunately, another one of the many companies or problems that have been referred to the RCMP. Can you just confirm that was approved when Cornwallis was still in charge of the program? This was one - there were quite a few, I had written down the number of clauses, but there are quite a few, 150-something I think.

MR. LAPOINTE: I would say yes to that.

MS. WHALEN: So it was while Cornwallis was in charge.

MR. LAPOINTE: Correct.

MS. WHALEN: Can you elaborate again about the inappropriate contract that was signed between Cornwallis and that company? Are you able to? There are some in the report . . .

MR. LAPOINTE: Yes, I'll pass that one to Ms. Colman-Sadd.

MADAM CHAIR: Ms. Colman-Sadd.

MS. COLMAN-SADD: What we found when we interviewed the owner of the mentor company in this instance was that he provided us with a copy of a contract between

his company and Cornwallis that provided Cornwallis with a master franchise in his company - and that's a franchise to sell further franchises in that company within a certain area - in exchange for, as we quote from the contract in the report, " . . . $100,000 to be forwarded to [mentor company] via the Nova Scotia Nominee Program."

MS. WHALEN: So clearly that's unusual, to say the least - unusual, and perhaps an abuse of power?

MR. LAPOINTE: Yes, we in fact concluded that this was an inappropriate benefit from the program.

MS. WHALEN: You've interviewed a lot of people, you've interviewed companies and immigrants, and I know you've had a close working relationship and a positive working relationship with the department - or I should say the Office of Immigration, did you ever speak to the committee members who were responsible for approving these companies?

MR. LAPOINTE: I'll ask Ms. Colman-Sadd to speak to that.

MADAM CHAIR: Ms. Colman-Sadd.

MS. COLMAN-SADD: We have spoken to the government committee members. We have not ever interviewed the Cornwallis committee member who sat on that committee when Cornwallis was responsible for the program.

MS. WHALEN: Can you shed any light on why they would approve a company that was actually resident in Moncton and had only a virtual office in Nova Scotia? Further, the evidence shows that the only business activity was the money going in and out around this Nominee Program.

MS. COLMAN-SADD: The information that we have with regard to the evidence that the money in the account related to the Nominee Program was not information that the business review committee would necessarily have been privy to.

With regard to why they would have approved a company that has a virtual office in Halifax and exists out of Moncton, I think that would be a question for them.

MS. WHALEN: I think it does cast further light on the level of their oversight and the way that they approached the criteria that were clearly in place. Even if it was a bit vague, there were clear rules to follow in terms of approving companies. So it just really raises alarm bells, I think, for all of us about how that was conducted.

MADAM CHAIR: Order. The time has now expired for the Liberal caucus.

I recognize Mr. Porter for the PC caucus. You have 12 minutes.

MR. PORTER: Thank you, Madam Chair. I just want to pick up where I left off, Mr. Lapointe, I ran out of time there. It had to do with a question on Page 19 I was talking about, in Paragraph 74, about the lawyer's name and my question there when the time expired was, did the lawyer know his name was going to go on this Form 5476?

Did the lawyer know that his name - if he wasn't the one signing it or adding it to it, and there's some question about how names were added to these forms, did the lawyer know? I mean he was receiving $20,000 in this example, times at least eight and maybe more, that we've not been able to determine - did he know his name was going on the forms?

MR. LAPOINTE: We would have to speculate, frankly, as to what he knew or didn't know, keeping in mind that he will not talk to us. What we do know is that he was, in fact, receiving funds for these files over a considerable period of time.

MR. PORTER: For which he provided no service.

MR. LAPOINTE: That's the evidence that we have.

MR. PORTER: Okay, so just on that, then, we have Cornwallis paying the lawyer $20,000 per nominee for service not provided. Is it common practice within the legal field - and I would assume not but I'll ask the question - that lawyers would be paid $20,000 for doing jobs that they really weren't aware they were doing - your opinion as an auditor? Again, going through this in quite a bit of depth.

MR. LAPOINTE: What we have reported, in fact, if you read on, is that the firm returned most of the funds but not all.

MR. PORTER: But we don't know why, either.

MR. LAPOINTE: We don't know why that would be.

MR. PORTER: Perhaps the lawyer felt he was wrong.

MR. LAPOINTE: We'd have to speculate as to why but one of our issues was that because we could not speak to him and he wouldn't answer our questions, we don't know why they returned some but not all of that.

MR. PORTER: I appreciate that, thank you. I know that Ms. Whalen was talking about the New Brunswick corporation and I asked a question, I think in my first 20 minutes, about Cornwallis and profiting and so on. To me this example would seem that Cornwallis would only do that for profit - there has to be something that comes back. There was nothing

in any of the findings that you had that would have been relevant to Cornwallis profiting from having a virtual company, or whatever you wanted to call it, by way of New Brunswick?

MR. LAPOINTE: What we reported as our concern with this is that we felt there was a benefit to Cornwallis in obtaining a franchise. That was the benefit that they appear to have received from this and that's what we said was inappropriate.

MR. PORTER: So the benefit was solely in obtaining a franchise whereby that franchise was probably worth some value, i.e. profit to Cornwallis? Yes, no - again, as the auditor, counting numbers here.

MR. LAPOINTE: Presumably a franchise has value, they paid $1 for it.

MR. PORTER: So there would be some profit to Cornwallis at the end of the day, in all likelihood, or there would be potential for that profit, anyway, I guess.

I'm just going to jump around a bit - I'm going through quickly and I've got to move on here. Paragraph 84 speaks to a number of things and some agents - these phantom agents, it's rather interesting. Is this acceptable, legal, moral practice? Again, we're talking about lawyers and a company here that has been contracted to do a job and obviously not performing, or it appears from your report.

MR. LAPOINTE: This whole issue of the so-called phantom agents - Paragraph 84 is what you're referring to here - was a difficult one to pin down. There was some indication that it's very common practice for this kind of thing to occur in the immigration field but we're not experts in it. We felt it was certainly, at the very least, contrary to the spirit of the program and the federal intent, but it was hard for us to judge whether there are serious concerns with this or not. We took it that far to say that while this is - what would I say? - questionable to us, it's a concern, but we can't really go any further and this is one that we then, in fact, passed on.

MR. PORTER: Maybe I missed it here but I thought you just said it was somewhat commonplace in the way that the immigration system works from other countries through to Canada.

MR. LAPOINTE: No, there were indications given to us by some people that this was a common practice but we don't have any way of knowing that, we have no way of knowing if it is a common practice, whether that's a good thing or not. So to some extent it's a bit of a muddied issue but there are certain aspects of it which were inappropriate, clearly, in terms of dealing with - when the requirements of a program now are clear, in dealing directly with them, it's simply not a practice that's allowed in the program now.

MR. PORTER: Okay, and on that I just want to jump to Paragraph 88. In the last sentence of that paragraph it goes on to say that "Most of the phantom agents were international immigration firms . . .", et cetera, one being a Canadian citizen but not a recognized agent. Was he eligible, then, to legally complete this work?

MR. LAPOINTE: None of these agents are eligible to directly receive payment in the program. The official agents who were listed on the form are eligible and qualified to receive payments under this program. So these people - think of them as being behind the scenes - are qualified to do the work but they're not qualified to participate in the program.

MR. PORTER: Somebody else is doing the work for them, they're getting the payment.

MR. LAPOINTE: There are a lot of variations going on with this.

MR. PORTER: Okay. And just on Page 22 at the top, again, the last sentence, "In all instances we are aware of, Cornwallis complied with these requests and paid the non-CSIC member." Do we know who these people were? Who do the payments go to? Do they have a connection to Cornwallis or to the nominees? In all of your audit, is there something that clearly states who these folks are?

MR. LAPOINTE: I'll defer that to Ms. Colman-Sadd.

MS. COLMAN-SADD: As it states on Page 22, there were instances where the lawyer that was involved, or the CSIC agent, requested that Cornwallis make a payment, rather to them but to a third party and Cornwallis, as best as we could determine, did comply with those requests.

With regard to whether or not those other agents had a connection to Cornwallis, that's not something that we have information on.

MR. PORTER: In Paragraph 93, during the review of the financial information provided, you noted that Cornwallis did not pay the full amount of agent commissions to recognized agents on 63 occasions. What do you make of this? As you go on to read that paragraph, there are some discrepancies there. Any idea why that wouldn't have happened within what you have found?

[11:45 a.m.]

MS. COLMAN-SADD: I guess a couple of things. We are aware of at least one instance where there was a loan between the company - Cornwallis - and the agent involved, so one could perhaps infer that perhaps the commission payments were in lieu of a loan payment, although that wasn't entirely clear from the documentation on file.

With the remainder of the cases where the full agent commission was not paid, we're not certain. As Jacques indicated earlier, Cornwallis initially co-operated and provided us with information during our audit and then decided not to co-operate further.

MR. PORTER: All right, just one last question I want to ask and it has been asked before, I think, and again, as clear as you can answer this, were any staff or politicians involved in any way profiting from the doing of this particular program? I mean you did some fairly detailed research here, we would know if - I would think that you would know, you pointed out others that have been involved so we're just looking to clarify once again, before I end off that question.

MR. LAPOINTE: What we're reporting here in this report has no such indication.

MR. PORTER: Thank you, Madam Chair, that will end my questions for today.

MADAM CHAIR: Thank you very much. Well, that concludes our questioning portion of the committee meeting. I would invite Mr. Lapointe and his staff to make any concluding comments that you wish at this point.

MR. LAPOINTE: Well, thank you, Madam Chair. I just want to end it off by saying that I do want to thank the committee for this opportunity to discuss our report with you. As you can see, it's a little bit different from most of the reports we have, it has some serious findings in it, but as always I appreciate the committee's support for the work of my office.

MADAM CHAIR: Thank you. We respect the work of your office as well. Thank you very much.

At this point we have circulated a motion that Mr. Steele has brought forward. The motion is in order and the floor is open for debate. Ms. Whalen.

MS. WHALEN: I'd like to add one amendment, if I could, to that. I think it's very important that the nominees who are eligible for the refunds should still be residents of Nova Scotia. I realize that is in the current residency refund option but I'd want to make sure that was in the wording of our motion, that there's no confusion that this is an option that should be open to people who have stuck by Nova Scotia and have made Nova Scotia their home.

So the wording I used was, where it says, ". . . that all nominees . . .", and what I've added is: who continue to make Nova Scotia their home, ". . . who entered in good faith into mentorships should receive . . ." - you can put it any way you like but I think it should say: who continue to make Nova Scotia their home.

MADAM CHAIR: Okay, so there has been an amendment proposed, it's in order.

First we'll deal with the amendment. So is there any discussion on the amendment? Mr. Steele.

MR. STEELE: It seems quite reasonable, just one note of caution on this, though, and that is it's precisely because of criteria like this that the program got into problems where people would fake up their residency in order to make it look like they met the program criteria. If we require that they be residents and somebody, say for example, lives in British Columbia, they're going to essentially do nothing more than pretend to move back to Nova Scotia. So it's a reasonable amendment and I think we can support it and should, but it does open up some issues about how exactly to verify this and make sure it's bona fide.

MADAM CHAIR: Okay, duly noted. Ms. Whalen.

MS. WHALEN: Just further to those comments, the residency refund option that's in place right now is running into exactly the problems that Mr. Steele is pointing out, that there are people who might be trying, after the fact, to establish that they've had a residence here or that they've had some history of staying here.

I know it is subject to abuse because of the amount of money that's on the table, but our aim as a province was to have people come here and settle and make this their home. That has always been our aim and people did - if they did use the program as a means to come into the country, to never do a mentorship and to go settle elsewhere, I think that's a different matter than those who are here and have made it their home. They've made quite an effort to identify themselves through the past year because they've actually formed an organization and have reached out to a lot of different communities for people who have come from different countries, to try to identify who is still here who did the mentorship. I'd like to make sure that we leave that in place. Thanks.

MADAM CHAIR: Any further discussion on the amendment? Hearing none, we'll vote first on the amendment.

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

The motion is carried.

Now we will vote on the main resolution as amended. Is there any discussion on the resolution as amended? Hearing none, I'll call for the vote.

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

The motion is carried.

Now, we have a couple of things I want to do before we adjourn. The subcommittee met and you have a copy of the report of the subcommittee. The subcommittee considered further witnesses in front of the Public Accounts Committee. I want to add to this that the subcommittee in our meeting also - these are the witnesses that we are proposing to come to the Public Accounts Committee in the next few months.

In addition to that we discussed the possibility of bringing forward, following the Auditor General's Report today, witnesses to address any of the outstanding issues that we saw arising from the final report on the Nominee Program.

I think clearly we've had the information this morning from the Auditor General on what happened, but we still have these outstanding questions about why it happened, how it happened, where was the accountability and the oversight, which I don't think has been resolved. What I'm saying to the committee is, the subcommittee is recommending that this report be approved with our topics, but I think the subcommittee wants some direction from this committee with respect to follow-up with the Auditor General's Report.

In addition to that we have the outstanding issue of subpoenas that were issued with respect to the information that was requested from this committee, which the Auditor General did get access to but the committee did not get access to.

The Auditor General has also raised the question that, although in this case he has received the information, there is concern about whether or not there will be a reoccurrence of these problems down the line. I would recommend that we hear from our Legislative Counsel, to give us some direction on this and his legal opinion.

How I think we could proceed is if you are in agreement with the subcommittee report, we will approve this. We have a meeting scheduled next week and I would like to add to the end of that meeting half an hour when we will hear from Legislative Counsel with respect to the subcommittee. Members of the committee at that time can bring forward to the committee suggestions with respect to the following up of witnesses to the Auditor General's Report on the Nominee Program.

So that's what I'm recommending we do. Is there any discussion? Hearing none, I would call for the question on the report of the subcommittee.

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

The motion is carried.

The report is adopted and we will see you next week when we have the South Shore Regional School Board in front of us. Remember, that committee will be extended by half

an hour - we'll go until 11:30 a.m. to give us an opportunity to deal with these other matters. Thank you.

We stand adjourned.

[The committee adjourned at 11:54 a.m.]