http://www.ottawacitizen.com/national/001018/4705731.html

18 October 2000

Liberals put 'public funds at 'unacceptable risk'

Shovelgate 'more than just sloppy paperwork,'
auditor general charges in report

Kathryn May
The Ottawa Citizen

Just days before an expected election call, Prime Minister Jean Chretien's government was blasted by Parliament's watchdog for allowing "longstanding and widespread" mismanagement of grants in the "billion dollar boondoggle."

Auditor-General Denis Desautels issued a massive 90-page report yesterday that not only confirmed the severity of problems and administrative chaos uncovered in the January 2000 internal audit that ignited the biggest scandal to rock the Chretien government, but added the very design of these programs was flawed from the start.

Mr. Desautels did not mince any words in his widely anticipated report.

He said the mismanagement at Human Resources Development Canada was "serious" and much more than "just sloppy paperwork," which is how the government dismissed the problem in the early days of the scandal.

"The problems ... are very serious. We found widespread problems in all key areas and in all the programs we examined," said Mr. Desautels.

"It was more than just sloppy paperwork. We found that controls had broken down, putting public funds at unacceptable risk."

He found further evidence of breaches of authority, improper payments, limited monitoring of finances and activities, approvals not based on established processes and projects approved without results or outcomes that could be measured.

He also found cases of payments based on oral agreements or retroactive changes to agreements, as well as projects funded with little adherence to terms and conditions and inconsistencies in how they were applied.

"This is serious, because taxpayers have a right to expect that the government will follow due process when it spends public money," Mr. Desautels said.

Mr. Desautels did give HRDC credit for taking steps to fix the mess and said an "action plan" enforced by Human Resources Minister Jane Stewart should fix most the problems, but "it's too early to declare everything is fine." He warned many of these problems are rooted in behaviour and working culture of the department which takes time to change.

Ms. Stewart said the report was an "unqualified endorsement" of the department's cleanup plan and showed how previous governments had ignored the problems for years.

"He points out that this is an issue that has been around for five separate governments and this government has chosen to fix it," Ms. Stewart said.

But Mr. Desautels worries that the loose financial controls that were at the heart of the HRDC mess, could be widespread across government. In audits of 10 departments, he found a lack of financial controls and monitoring to ensure those controls were followed.

"I am concerned that so few of the departments we examined have the basic financial management capability they need today, let alone in the future," said Mr. Desautels.

He also sounded an alarm about the need to build a "strong base" of ethics and values in public servants who run these programs and dole out the money. He considers this critical because spending decisions are based on the "judgment calls" of bureaucrats.

"Financial management and ethics ... are fundamental elements that underpin good governance and require strong leadership at the highest levels."

In his audit, Mr. Desautels closely scrutinized four of the 40 grant and contribution programs managed by the giant HRDC: