Global Affairs audit describes contracting shortfalls, but officials say no wrongdoing found

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A Global Affairs audit found that one in five reviewed contracts did not follow federal rules but department executives told MPs Wednesday that the report largely points to administrative errors rather than wrongdoing.

Three senior Global Affairs officials appeared before the House of Commons government operations committee to answer questions about a recent internal audit of procurement practices.

“The department has been very seized with the results of this audit,” said assistant deputy minister and chief financial officer Shirley Carruthers.

That audit report described significant shortcomings, including 19 contracts that did not comply with the Financial Administration Act that governs how officials manage federal spending. The audit is based on a random sample of 100 contracts, as well as an additional sample of 74 vendors selected “based on risks and anomalies” that were identified.

The report lists examples of anomalies, including repeated contracts awarded to the same former public servants; contracts awarded to registered lobbyists; procurement patterns where vendors were awarded several non-competitive contracts; unusual amendments where the value of the amendment is much higher than the original contract value; vendors with unusual or incomplete names; and vendors with multiple vendor names and numbers.

The audit’s risk-based sample found three cases of contract splitting, which the report defines as an effort to avoid financial approval thresholds.

The report does not provide detail on the examples listed and only a small number of specific cases were discussed during Wednesday’s hearing.

In one case, officials said a manager approved a contract for coaching services that she benefited from directly. In another case, one manager was found to have been involved with three cases of contract splitting. The issue was raised with the manager’s supervisor and mandatory training was approved.

The department’s internal audit team said that between April 1, 2018, and June 13, 2023, Global Affairs signed 8,350 consulting service contracts for a total value of $567-million.

Ms. Carruthers described the identified issues as errors.

“There’s nothing in here that actually signals to any kind of wrongdoing, misuse of funds. Nothing to actually indicate that we weren’t able to provide value for money for Canadians,” she said. “Obviously, it did point to a few, or some, errors that were unfortunate, but I feel very confident that the department now has the tools and processes in place that we’re able to mitigate these risks.”

Chief audit executive Natalie Lalonde and director general Daniel Pilon appeared Wednesday alongside Ms. Carruthers.

Global Affairs is responsible for Canada’s diplomatic presence, meaning it conducts a large volume of contracting outside of the country.

Conservative MPs on the committee repeatedly challenged Ms. Carruthers’s summary of the report’s findings.

“You determine there’s no evidence of wrongdoing. You may conclude that there’s been instances of irregularities, but I view this from a different lens,” said Conservative MP Larry Brock. “I view this from the lens of a former Crown Attorney for 30 years. And there are clear examples in my view of criminality here and outright corruption.”

Conservative MP Garnett Genuis moved a motion to have Foreign Affairs Minister Mélanie Joly appear for two hours to answer questions about the audit.

“The principal point here is that there’s this very significant audit, that shows very significant problems of contracting within her department,” he said. “Insofar as we have a system of ministerial accountability, I think we should hear from the minister about these matters.”

Liberal MP Irek Kusmierczyk said he opposed calling the minister. He then talked until the committee ran out of time, leading the meeting to end without a vote on the motion.

“Nowhere in this study, and nowhere in this report, does it talk about malfeasance, does it talk about misappropriation, does it talk about corruption, does it talk about fraud. It is about strengthening documentation,” Mr. Kusmierczyk said.

He said that having Ms. Joly appear would be a misallocation of her time during a period when the minister is dealing with significant world events in the Middle East and Ukraine.

“It harms the work that Canadians need the Foreign Minister to be focused on,” he said.