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Harder calls for independent oversight of Senators’ expenses two years after AG’s report, says current structure ‘inherently flawed’

The Senate's Internal Economy Committee is looking at a variety of models that the Senate could adopt to scrutinize Senators’ expenses, says Quebec Conservative Sen. Leo Housakos, chair of Internal Economy Committee.

Government Senate Representative Peter Harder says the Senate should set up an independent oversight mechanish to scrutinize the expenses of Senators. Quebec Conservative Sen. Leo Housakos, chair of the Senate's Internal Economy, bristled at the suggestion. The Hill Times file photographs

PUBLISHED :Monday, Sept. 25, 2017 12:00 AM

The government’s top player in the Senate says it’s time the Upper Chamber finally acts on Auditor General Michael Ferguson’s 2015 recommendation to establish an independent oversight of Senators’ expenses and replace the Senate’s Internal Economy Committee as the “ultimate authority” on Senators’ expenses because the structure is “inherently flawed” and raises an appearance of conflict of interest.

In a piece published on Sept. 15 in the IRPP’s Policy Options magazine, Sen. Peter Harder, the government’s Senate representative, said although the Senate is working hard to ensure the Senate expenses scandal of 2012-16 “becomes nothing more than a distant memory,” the Senate needs to finally establish independent oversight of Senators’ expenses and all related decision-making.

The Senate’s powerful Internal Economy Committee, headed by Conservative Senator Leo Housakos, is still the “ultimate authority on Senators’ expenses,” he said.

“This structure is inherently flawed because it is composed solely of Senators, a dynamic that–whatever the calibre of its membership—raises an obvious appearance of conflict of interest,” wrote Sen. Harder, adding that the AG recommended in June 2015 that the “oversight of Senators’ expenses should be performed by a body…the majority of whose membership, including its chair, is independent of the Senate.”

  

Sen. Harder said independent oversight is important because Senators shouldn’t be setting their own rules and says the Senators on the Internal Economy Committee “may be perceived to be protecting their own allies, sheltering the Senate from scrutiny, or could be seen to be settling old political scores.”

“Given this context, Ferguson’s call for the Senate to review the mandate and structure of the Internal Economy Committee and create an independent oversight of Senators’ expenses should be no surprise,” Sen. Harder wrote.

“Senators must acknowledge that it is inappropriate for them to stand in ultimate judgment of their peers without a reasonable degree of transparency and independent oversight,” he wrote.

He said the U.K. House of Commons established the powerful Independent Parliamentary Standards Authority in 2009 after revelations of systemic abuse by MPs, and the Australian Parliament created a similar Independent Parliamentary Expenses Authority in July.

  

“Senators must acknowledge that it is inappropriate for them to stand in ultimate judgment of their peers without a reasonable degree of transparency and independent oversight. Canadians were rightfully taken aback upon discovering that Senators whose claims were found to be inappropriate by the auditor general also sat in judgment of other Senators involved in the turmoil. When taxpayer funds are involved, when people’s reputations and livelihoods are at stake, fairness, independence and transparency must not only apply, they must be seen to apply,” Sen. Harder wrote.

The independent oversight body would review the Internal Economy Committee’s decisions on the expenses of individual Senators; conduct a full review of the Senate rules, policies, and guidelines for Senators’ expenses; oversee the internal auditing of the Senate and have exclusive authority to select a Senate internal auditor or an outside auditor; and review all annual and interim financial statements.

He suggested the oversight body would have a majority of external members and a minority of Senators.

Sen. Harder also said that in order to fulfill the principle that Senators are the ultimate decision-makers, the oversight body would not have binding power and authority over the Senate at the time of its initial creation. He said it would have the power to make its findings to the public and not enforce them without the consent of the Senate. But if the Internal Economy Committee did not act on the findings, he said all documents would be released to the public.

  

“Transparency is a powerful sanitizer, and one would expect the Internal Economy Committee to routinely adopt the course of action recommended by the independent body,” said Sen. Harder.

In an interview with The Hill Times, Sen. Harder said he wrote the article to acknowledge the progress that the Senate has made “on greater transparency and accountability,” and also to point out what needs to be done. He declined to react to an open letter from the Internal Economy Committee sent on Sept. 20, but said that he was “delighted to see the committee moving on this matter.”

“I do think it’s important to reference the work that has been done and the work that needs to be done,” he said.

In his historic audit report tabled in June 2015, Mr. Ferguson determined that 30 Senators claimed expenses worth about $1-million “that were not in accordance with the applicable Senate rules, policies or guidelines.” For this report, the AG audited the about 80,000 expense transactions of 116 Senators who served in the Senate between April 2011 and March 2013.

The Senate asked Mr. Ferguson to conduct the audit in 2013 after numerous media reports alleged that some Senators on both sides of the aisle claimed ineligible housing, travel and office expense claims.

For these flagged expenses, the Senate’s Internal Economy Committee set up an arm’s length arbitration process to give the Senators one last chance to justify their expenses. For this, the committee retained former Supreme Court justice Ian Binnie to hear the explanations of the Senators. Of the 30 Senators, 14 took their cases to Mr. Binnie, who after receiving their reasoning and reviewing their files, slashed the outstanding amounts to about half of what the AG determined. The total outstanding amount for the 14 Senators was $322,611 which Mr. Binnie reduced to $177,898.

Since that time, if Senators face any hurdle regarding admissibility of their expenses, they can take their files to Mr. Binnie.

In the audit report, Mr. Ferguson made a number of recommendations to improve the financial oversight of the Senators’ expenses. One key recommendation was to establish an oversight body, “the majority of whose membership, including its chair, is independent of the Senate.”

The AG also said that “the meetings of the oversight body should be open to the public, and its reports, minutes, decisions, and reasons should be published on the Senate’s website.”

It was also recommended that the Auditor General of Canada “should be given a clear mandate as the external auditor to conduct audits of the Senate of Canada, including audits of Senators’ expenses.”

Mr. Ferguson added that the auditor general “should have unrestricted access to all information needed to reach audit conclusions on the expenses incurred by Senators, including information in the possession of individual Senators.”

Quebec Conservative Sen. Leo Housakos is the chair of the Interal Economy Committee. The Hill Times file photograph

But members of the Senate Internal Economy last week fired back in response to Sen. Harder’s article. The members sent an open letter to Sen. Harder, on Wednesday, Sept. 20, which was also distributed to members of the Parliamentary Press Gallery. The letter was signed by four Senators, all members of the committee, including Conservative Senator and chair Leo Housakos (Wellington, Que.); Liberal Sen. Jane Cordy (Nova Scotia), deputy chair; Conservative Sen. David Wells (Newfoundland and Labrador), and Independent Sen. Larry Campbell (Vancouver, B.C.). All the Senators went through the AG’s audit.

In the letter, the four Senators acknowledged that the committee has not implemented the AG’s recommendation on independent oversight of Senators’ expense “to the letter.” But, they said the committee has introduced measures to “address the concerns raised” by Mr. Ferguson, that amount to a level of “public scrutiny unparalled by other legislatures, including the House of Commons.”

The letter pointed out that all Senators’ expenses are proactively posted on the Senate website on a quarterly basis. Also, the Internal Economy Committee meetings are now open. This is important, they said, because if a Senator is facing any issue regarding admissibility of expenses, that Senator can take it to the Internal Economy Committee. If that Senator is not satisfied with the committee’s decision, the issue can be raised before the full Senate. Still, if that Senator has concerns, he or she can make their case to Mr. Binnie.

Sen. Housakos was not available for an interview last week, but at last week’s Internal Economy Committee meeting, he said the committee has been looking at different models to choose from that the Senate could adopt to scrutinize the Senators’ expenses.

“I take exception when the government representative in the Senate stands up and says we haven’t done enough in regard to oversight when he knows full well over the last two years we’ve been in in-depth discussions to even a step further and look at the various models,” he said at the committee meeting on Sept. 21.

The Hill Times