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AG’s $24-million Senate audit value questioned as high-profile RCMP cases dropped

By Abbas Rana      

But the Senate's audit was never intended to be for 'cost recovery,' and its recommendations have helped the Red Chamber in improve its expense disclosure regime, says AG spokesman Ghislain Desjardins.

Sen. Larry Campbell has issues with the fact that $24-million was spent on an audit of Senators' expenses, little money has been recovered, and no criminal charges have been laid as a result of that audit. The Hill Times photograph by Jake Wright
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A senior member of the powerful Senate Internal Economy, Budgets and Administration Committee is raising questions about the value for money in the $24-million Senate audit by Michael Ferguson after high-profile criminal cases related to the Senate expense scandal were recently dropped.

Mr. Ferguson identified about $1-million in misspending by 30 Senators, which was slashed in half by special arbiter and former Supreme Court justice Ian Binnie. Mr. Ferguson recommended that the cases of nine Senators be recommended to the Mounties, and after about a year the RCMP has not filed any charges against any of these Senators.

“Well, let’s see. He spent $24-million. He found less than $1-million in misspending. Then, [former] justice Binnie cut that in half again. For $24-million, we found a half a million over two years that the courts have said, ‘You know, the rules are unclear.’ That’s the answer,” Independent Sen. Larry Campbell (British Columbia said in an interview with The Hill Times last week.

“They’re sort of speaking for themselves, aren’t they?” Sen. Campbell, a former RCMP officer, chief coroner, and mayor of Vancouver, said of the response from the RCMP to these cases. “There haven’t been any charges laid in any of the recommendations. Anybody can ask the police to investigate, if that’s his role, if that’s what he wants to do.”

The comments come following announcements from the RCMP this month to not file charges against Independent Sen. Pamela Wallin (Saskatchewan) and drop fraud charges again former Liberal Senator Mac Harb, and also the April dismissal in court of all of Independent Sen. Mike Duffy’s (Canvendish, P.E.I.) 31 charges of fraud, breach of trust, and bribery related to his residency, travel, and office expenses. Independent Sen. Patrick Brazeau (Repentigny, Que.) is the only one still facing fraud charges related to Senate expenses.

Ghislain Desjardins, a spokesman for Mr. Ferguson, said in an email that the audit was never intended for “cost recovery,” and its recommendations have helped the Red Chamber in improving the expense disclosure regime.

“Those audits were never intended to be cost recovery,” he said. “We do not measure the cost of the audit against the amount of misspending or the number of referrals to the RCMP or other authorities. Focusing the comparison in the way that it is often done devalues the role that the audit played in respect of all other Senators for whom nothing was found amiss.”

He added that the audit “was worth the amount of effort we put into it” and if this review had not been done, Canadians would be asking for “such an audit.”

Mr. Desjardins said that Mr. Ferguson stands by the results of its audit and the recommendations that were made to improve the disclosure process of Senators’ expenses. He referred to public remarks made by Ferguson in the past to explain why the audit cost taxpayers $24-million.

“You can do that comparison just to that amount of money that’s identified for the Senators, but I think you also need to understand that we have done here has value beyond that,” Mr. Ferguson said during a news conference last June after his report was tabled. “First of all, I think it is going to result in much more tightening up of the expenses of the Senators. The public wanted to know what was the case with all of the Senators. So if we hadn’t done this audit, I think people would be asking for such an audit.”

He added that if the Senate had put in place a regular audit regime, the cost would not have been that high.

“If the Senate had in place a regular audit regime, had the transparency and accountability that we have been saying is missing, if that had been in place, we wouldn’t have had to put that many resources into the audit. So I’m not happy we had to do it, but I am convinced that the audit was necessary, and that in the end what we produced was worth the amount of effort we put into it.”

To deal with the ongoing Senate expenses issue that dominated the news cycle for months starting in late 2012, the Senate invited Mr. Ferguson in June 2013 to conduct a comprehensive audit of all Senators who served in the Red Chamber between April 1, 2011 and March 31, 2013.

In total, Mr. Ferguson audited 116 current and former Senators and did not audit the ones who were already under the RCMP investigation, deceased, or were facing serious health challenges. The four Senators that Mr. Ferguson did not audit because of ongoing investigations were Sen Duffy, Sen. Wallin, Sen. Brazeau, and Mr. Harb. The three former Conservative Senators were suspended from the Senate in 2013 because of this scandal, and have since been reinstated, and Mr. Harb resigned from his seat.

After reviewing the 80,000 expense transactions of all 116 Senators, the auditor general unveiled his report last June and found about $1-million of misspending by 30 current and former Senators. Mr. Ferguson recommended that the files of nine of these 30 Senators be referred to the Mounties, which was done by the Internal Economy Committee.

For the Senators who disputed Mr. Ferguson’s audit findings, the Internal Economy Committee established an independent arbitration process overseen by Mr. Binnie, for one last opportunity to explain their expenses. Of the 30 Senators, 14 chose to contest the auditors’ findings before the former Supreme Court judge. Mr. Binnie tabled his arbitration report in March in which he upheld 55 per cent of Mr. Ferguson’s audit findings and asked the 14 Senators to pay back $177,898, compared to $322,611 that Mr. Ferguson had determined. All 14 paid back. The arbitration process cost the taxpayers between $200,000 and $225,000.

Seven former Senators chose not to make use of the arbitration process have not paid back the money and now may now face legal action by the Upper Chamber. They include former Liberal Senators Sharon Carstairs, Marie-P. Charette-Poulin, Rose-Marie Losier-Cool, Bill Rompkey, and Rod Zimmer, and former Conservative Senators Don Oliver and Gerry St. Germain.

The Senate Internal Economy Committee has retained outside legal counsel to recover the outstanding amount from the seven former Senators who have not paid back the money.

As of last week, the RCMP had not announced if criminal charges against Sen. Brazeau would stand or if the others whose files were referred to them on the recommendation of Mr. Ferguson would be charged.

“All cases and files are independent of one another,” wrote Brigitte Mineault, an RCMP spokeswoman, said in an email to The Hill Times last week. “The remaining files are still in the process of determining if a criminal investigation will be initiated.”

After the Duffy verdict, in which the former CTV broadcaster was exonerated of all charges, political and legal experts said they were not surprised the RCMP decided not to press charges against Sen. Wallin or to pursue a legal case against Mr. Harb.

“I’m not surprised at all by those decisions in light of the verdict in the Duffy case,” said Prof. David Smith, a political science professor at the University of Ottawa.

Sen. Campbell said that, following the Judge Vaillancourt’s decision, chances of success for the prosecution against Sen. Wallin and Mr. Harb would have been slim.

“From all of the evidence that was introduced at Sen. Duffy’s trial, what are the chances of success?” Sen. Campbell said. “That’s what they really have to base things on, your chances of success for prosecution and I just don’t think it’s there.”

In the final AG audit report, the central recommendation was to establish an oversight body, “the majority of whose membership, including its chair, is independent of the Senate.”

It was also recommended 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.”

Mr. Ferguson recommended that the auditor general “should be given a clear mandate as the external auditor to conduct audits of the Senate of Canada, including audits of Senators’ expenses.”

He also recommended 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.”

On May 9, the Senate Internal Economy Committee issued a release stating that it has adopted a new disclosure model to “provide more details and uniformity in the quarterly disclosure of Senators’ expenses.” The press release further said that the new disclosure model will be enforced in the fall and the “infrastructure is being built to support this new model.”

Conservative Sen. Leo Housakos (Wellington, Que.), chairman of the Internal Economy Committee, was not available for an interview last week. But in response to a query from The Hill Times, about specific details of this new model, Jacqui Delaney, his director of communications, said that it’s a “work in progress” and details were not available at this time.

Jean Fournier, former Senate ethics officer, said in an interview that he was surprised that the Senate has taken close to a year in implementing the auditor general’s recommendation about the financial oversight and still it has not been operational yet. He said that the new oversight regime should have been functional within a few months after the report was released.

Mr. Fournier last week suggested that an independent body should review how the Senate handled its expenses issue and what lessons can be learned so that any such issue does not arise again. He said that the report of such a body should be made public as a reassurance to Canadians that the Senate takes its responsibilities seriously.

“There should be a review by an independent third party of the handling of the matter by the Senate over the last three years,” said Mr. Fournier. “Not to apportion blame but to draw some lessons so that this does not happen again. Report should be public.

“Being proactive in this way would provide a measure of reassurance to the public that the Senate takes it’s responsibilities seriously,” he said.

Since the start of the Senate expenses issue, the Red Chamber has undertaken a number of initiatives to improve the disclosure of expenses by Senators. For example, it has ended the so-called honour system in filing expense claims, Senators have to provide their income tax returns, driver’s licences, and health cards annually to prove their residence in the region that they represent. And Senators get reimbursed for their international travel only if they’re travelling on committee business or they have to seek advance approval from the Internal Economy Committee.


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