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THE STANDING COMMITTEE ON INTERNAL ECONOMY, BUDGETS AND ADMINISTRATION EVIDENCE OTTAWA, Thursday, May 9, 2013 The Standing Committee on Internal Economy, Budgets and Administration met this day at 8:36 a.m. in camera, pursuant to rule 12-7(1), to consider financial and administrative matters. Senator David Tkachuk (Chair) in the chair. [English] The Chair: I see quorum, so if the doors could be closed, please, and then we'll begin. Just a few comments before we start, colleagues. I thought yesterday was, actually for the Senate, was a very good evening. I was mentioning to some of my colleagues this morning that sometimes the Senate shows its best, and it's too bad that that wasn't public last night because Senator Cordy: It was in the paper today. The Chair: Well, that's because someone decided to put it in the paper, but you know what? This has been a plague on our house for quite some time, really since this whole process started. It has been disconcerting to both the deputy chair and me, but I can't seem to prevent it. What we'll do this morning is the auditors are here because some senators had requested that they had wished some further questions. We'll deal with that. Then we'll go to the first item will be Senator Duffy's report, the report of the subcommittee of Internal Economy, the audit subcommittee. And there was some discussion yesterday about consequences, further consequences. What we'll do is, with your indulgence, it will be Senator Duffy, and then we'll have we'll proceed to the votes for the reports. What we're considering is the report that we have in front of us, so I'll move the adoption, we'll have a discussion, we'll vote on that report. Then we'll do Senator HSarb and Senator Brazeau. And then the next item on the agenda, if anybody wants to bring up the issue of if there are other consequences that we wish to deal with besides what the subcommittee we can do that with a separate resolution. So if someone has a separate resolution to bring forward, they can bring forward at that time. If not, we'll have a discussion if someone brings it up, then a vote. If someone doesn't bring it up, then we'll go directly to the report of Internal Economy on travel policy. Is that okay? George and I have had an opportunity this morning to just quickly go over. I think we're good, and I always consult with my esteemed deputy chair. So we'll start with the auditors, who we have here. I understand that there are questions, so I'm awaiting and welcome, gentlemen, and thank you for coming this morning. Any questions? Senator Munson: Do we have those letters that we were going to (inaudible)? The Chair: Yes, we do. Gary W. O'Brien, Clerk of the Committee: We'll distribute them now. The Chair: Senator Furey.

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Senator Furey: Thank you, chair. Again, thank you, gentlemen, for coming back. Last night we talked briefly about travel pattern. You used the example of Ottawa-St. John's-Ottawa versus St. John's-Ottawa-St. John's. Senator Johnson: Can you speak up, sir, please? Senator Furey: Oh, I'm sorry. Last night we briefly discussed travel patterns, and I was asking you a question about the weight you gave to a travel pattern that showed Ottawa-St. John's-Ottawa versus St. John's-Ottawa-St. John's for somebody who lives in St. John's. And Senator Duffy subsequently commented on that and said, you know, this could be distorted by the fact that you could be driving a vehicle one way and then have your pattern skewed the other way. In your deliberations, did you give any consideration to that type of thing, or were you able to ascertain how much travel was air travel versus vehicular travel? Alan Stewart, Partner, Forensics, Financial Advisory, Deloitte LLP: Yes, we do know how much was air travel versus vehicular travel. Senator Furey: And? Mr. Stewart: The specific number of trips by air and by car? Senator Furey: Well, just give me generally an idea. Like, were they equal in number, or were they mostly air or vastly air, only a few vehicular? Gary Timm, Partner, Financial Advisory, Deloitte LLP: If you can just bear with me. I just want to confirm for one minute. And you're speaking for Senator Duffy in particular? Senator Furey: Yes, because Senator Duffy raised a good point last night about how a particular travel pattern could be skewed, and I'm just wondering if you had any information on that. Mr. Timm: Okay. And if I may, in terms of Senator Duffy's report, on page 18, the first paragraph under section 6.1, basically, the last sentence in that paragraph indicates it looked like he drove Senator Furey: Sorry, what page are you on? Mr. Timm: Sorry, page 18, section in the English version, sorry. And it's section 6.1, page 18. Senator Furey: I'm into the schedules, sorry. 6.1. Mr. Timm: No problem. And the last sentence in that so, basically, what we saw was that he would drive one time back and forth each year, and the rest would have been air travel. Senator Furey: Okay. And would you give consideration to and not just in Senator Duffy's case, but in all the cases, are you looking at spousal travel as well? Mr. Timm: When we looked at this in the different expense reports, that spousal travel, we would have seen that and reviewed that as well, yes. Senator Furey: Did you find anything peculiar in that travel pattern, or was that just normal? Mr. Timm: Nothing that we noted in particular at the moment, no. Senator Furey: Okay. Thank you, chair. The Chair: Senator Munson.

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Senator Munson: Is it appropriate at this time to with the auditors here to ask Senator Duffy questions on his letter, or should The Chair: We're going to get to Senator Duffy's report as soon as the auditors are done with. Senator Munson: Okay. I'll wait I'll reserve to that. Thank you. The Chair: So if there are no further questions, then are we done with the auditors? They came up here for one question? Well, then, thank you very much, then. Senator Duffy, do you have any questions for the auditors? Okay. Well, we're done. I appreciate you coming, and I'm sorry about that. Senators had asked yesterday to have you here. I acquiesced, and so we're done. Thank you very much. Let's go to the first item. You all have a copy of Senator Duffy's the report of the audit subcommittee of the Standing Committee on Internal Economy, Budgets, and Administration? Is there a name to the report? Senator Stewart Olsen: Well, in a sense. Just to remind everyone that senators who are here, for Senator Duffy as well, they're not here as witnesses, so you can choose to answer questions, if you like, but try to remember, it's not a session, so they're not here it's your choice if you answer or not. The Chair: Senator Duffy. Senator Duffy: Thank you, Mr. Chair. We don't have a copy of the subcommittee report, so we don't know what you're discussing. The Chair: You should have. It was handed out last night. I'm sure it was. Senator Duffy: Not to me. I have a copy of the audit, but I don't have any recommendation anything from the of what you're proposing. I see a document here marked confidential. I never received that. The Chair: How come? Senator Duffy: Could I get a second for me and my lawyer could read it while The Chair: Sure. You go right ahead. Well, you can go ahead and do that while we're I might as well present the report. I might as well go through the report. Senator Kinsella: Chair, is there a question before the committee on this first report dated May 9? Is that the question before the committee? The Chair: Yes. We're now on the subcommittee report, so I'm going to try and get through the report as best I can. So, colleagues, what happened was, as you well know, on February 7, 2013, the audit subcommittee met to review various matters, of which one was media reports with respect to Senator Michael Duffy's living allowances in the National Capital Region. The administration was asked to provide a summary report of Senator Duffy's travel patterns to P.E.I., which raised concern with the subcommittee. And we'd agreed to amend the current contract with Deloitte to include an examination of Senator Duffy's claims as well. This decision was reported to the Standing Committee on Internal Economy, Budgets, and Administration on February 14, 2013. Deloitte was asked to review Senator Duffy's travel claims and supporting documentation and to determine whether the travel occurred or could have occurred, and to categorize the claims as appropriate subject to the reimbursement to the Receiver General or subject to consideration and

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determination by the Standing Committee on Internal Economy, Budgets, and Administration, as well as to assess whether the primary residence was located for Senator Duffy. Deloitte was presented and provided with all documentation internal to the Senate that could be relevant to its examination. There are a couple points that are important that Senator Duffy wrote to me on February 22 in my capacity as chair of the standing Senate committee. He said that he had filled out the Senate forms in good faith, that he may have been mistaken, and he stated his intent to repay the housing allowance that I have and I'm quoting from his letter that I have collected to date. Senator Duffy asked to be provided with the amount to be repaid in order to settle this matter in full. We complied, and repayment was subsequently made in the amount of $90,172.24, which included the reimbursements plus interest at prime plus one. Deloitte completed its report, as you have attached, based on available information on Senator Duffy's travel claims, which provided third party proof of travel from commercial carriers and Senate telecommunication invoices as well. Deloitte was asked and was able to confirm within 94 per cent accuracy and another 3 per cent likelihood Senator Duffy's location during the period of review, Ottawa versus declared primary residence. Three per cent of his time his location was unknown, and this information is fundamental to our determination regarding Senator Duffy's eligibility to claim expenses. Deloitte did note that prior to the adoption of the travel policy, a definition of primary residence did not appear, and Deloitte further noted that the regulations and guidelines applicable during the period of our review do not include criteria for determining primary residence. Deloitte reported that they were unable to assess the status of the primary residence declared by Senator Duffy against existing regulations and guidelines. However, they did conclude that all of the trips between OttawaGatineau and P.E.I. claimed by Senator Duffy did occur. The subcommittee acknowledged Senator Duffy's finding that criteria for determining primary residence are lacking. This is being addressed by the main committee. The declaration of primary and secondary residence form that accompanies the policy instrument in use since 1998 requires senators to affirm whether their primary residence is within 100 kilometres from Parliament Hill or is more than 100 kilometres from Parliament Hill. To claim living expenses in the NCR, any residence owned or rented by senators must be a secondary residence for use by that senator while in the NCR for Senate business. Your subcommittee declared and considers this language to be unambiguous and, plainly, if a senator's primary residence is in the NCR, he or she should not be claiming living expenses for the NCR. Deloitte's report has informed our determination of the appropriateness of the living expenses filed by Senator Duffy. Senator Duffy was found to have spent approximately 30 per cent, or 164 of the 549 days, in the period of review at his declared primary residence. Your subcommittee recommends that the repayment of living expenses from Senator Duffy dating back to the time of his appointment was properly reimbursed by him and accepted by the subcommittee, and that living and travel expense claims submitted for reimbursement by Senator Duffy be monitored from the date of adoption of this report for a period of not less than one year. Yes. I've got a speaker's list, so I've got Senator Munson and then Senator Stewart Olsen. Senator Munson. Senator Munson: Thank you, chair. Cognizant of the fact that this is not a trial or a hearing, as Senator Stewart Olsen just explained to us, I'd like to just ask, if you care to answer, Senator Duffy, in your letter to the chair, your last paragraph

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The Chair: I'm sorry. If you don't mind, I had asked senator I should have gone directly to Senator Furey. If that's okay with you, and then I have to move the adoption of the report, which I forgot again. Senator Furey. Senator Furey: This is just purely a procedural comment, Senator Munson; it doesn't impact on what you're saying. Senator Duffy should be fully aware that if he chooses to answer a question, it's quite proper for him to consult with his solicitor before doing so and, of course, every opportunity would be given to do that. The Chair: Okay. I'd like to move the adoption of the report. All right, so it's on the table. Thank you, Senator Smith (Saurel). Senator Munson. Senator Munson: You know what makes me feel good in the morning is to be surrounded by lawyers because I'm going to realize how anyway. Thanks, George. I appreciate that. Senator Furey: I get the same feeling being surrounded by journalists! Senator Cordy: Touch! Senator Munson: Well, there's still well, I can't answer that. I'll take that. I guess I have to take that. We're not all that bad. The third sentence, anyway, you say, Further, I believe that the Senate rules on housing allowances are ambiguous. Could you explain to us how the housing allowances for all senators are ambiguous? Senator Duffy: I think I can't do any better than what Deloitte said this morning. Senator Munson: You can't explain what the word ambiguous means in terms of what Senator Duffy: Senator, we've known each other a long time; you know what it means, and Deloitte gave us the answer to the question this morning. Senator Munson: Thank you. The Chair: Senator Stewart Olsen. Senator Stewart Olsen: Thank you, chair. I'd like to move an amendment to this report, on page 3, the paragraph starting, The subcommittee acknowledges Deloitte's finding that the criteria for determining primary residence are lacking. This is being addressed by the main committee. I move that we delete the rest of this report down to this next paragraph, which begins, Deloitte's report has informed our determination of. Oh, sorry. I move that we delete the portion of the paragraph after this is being addressed by the main committee, deleting the portion of that paragraph down to the next paragraph in the report, Deloitte's report has informed our determination. Senator Downe: And the rationale? Senator Stewart Olsen: My rationale is the senator has paid back the money, paid it back in good faith a long time ago. I would prefer to accept the repayment and move on with this report. The Chair: Any further discussion? Yes, Senator Fraser. We're on the amendment. Senator Fraser: Yes. Senator Downe: The report hasn't been moved yet.

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The Chair: Yes, I moved the report. Took me a while. Senator Fraser: If we adopt the amendment, anybody reading this report is going to say, Then why are you keeping the money? There has to be some explanation for the Senate's decision to keep the money. If all we say is that we acknowledge the criteria are lacking, then my instant response is, so we should give back the money. I think that the remainder of that paragraph explains why we are deciding to keep the money, and I haven't heard anybody argue that we should not keep the money. If a subamendment were appropriate and could achieve some degree of consensus, I would suggest that we delete not the whole passage that Senator Stewart Olsen suggests, but the last three and a half lines, and simply say, Your subcommittee considers this language to be unambiguous without sort of rubbing salt in the wound with the remaining half of that sentence. But, otherwise, I think we're opening more cans of worms than we're closing. The Chair: Senator Fraser, you're going to so this is being addressed by the main committee and then . . . Senator Fraser: And then preserve all of that paragraph I'm not making a motion; I'm making a suggestion. I'm not a member. The Chair: I understand, Senator Fraser. Senator Fraser: Okay. My suggestion is that we preserve all of that paragraph down to the word unambiguous, which is in the fourth last line and put a period in there. And if colleagues thought it was a little . . . Senator Furey: Over the top. Senator Fraser: Yes. The Chair: Thank you for that suggestion. I'll leave Senator Stewart Olsen to ponder on that, and I'll go to Senator Tardif. Senator Tardif: Thank you. I had a previous question, but I was going to ask if the report was unanimous. The Chair: No, the report was not unanimous. Senator Tardif: Okay. And I want to speak against the amendment. I think that, as Senator Fraser has indicated, it would make it very difficult to explain why we are keeping the money. And I don't see why we would be changing the language for this particular senator as opposed to the other two senators that are in the same position, and we are using the same language that the subcommittee considers this language to be unambiguous and reviews that in the other two senators. I don't know why an exception would be made if we are keeping the money for this particular senator. Senator Massicotte: Thank you, chair. Just my interest is to be sure that we make the right decision and all the information is on the table. Could I ask the subcommittee to explain what is it in Deloitte's report they say the facts are there, and based upon the facts, they came to a certain conclusion. For the sake of colour, could you maybe describe a little bit how you came to the conclusion from a more factual sense? Because I think yesterday we agreed that as far as there's no number sense. Percentages will not be conclusive. It's a determining factor, but not the determinant.

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So could you add a bit of colour to say how you came to the conclusion with, I presume, the facts principally in Table 7? Could you add a bit more there? Senator Marshall: Are you talking about the Duffy report? Senator Massicotte: Yes, the Duffy report. Senator Stewart Olsen: We should deal with the amendment. Senator Marshall: I didn't deal with our subcommittee didn't deal with the Duffy report. The Chair: I should explain that I think it's fair to say that we're all in agreement, all three of us were in agreement that Senator Duffy's expenses were not proper and that Senator Duffy lived his primary residence was in the National Capital Region. The disagreement came on other points, and that's why it wasn't unanimous. I think we all we believed that the forms were not ambiguous, that Senator Duffy should have known what he was signing, and that it was very clear what the primary residence form said. The travel patterns also indicated strongly that Senator Duffy was travelling from here to P.E.I. and return. Those were, I'd say, the main reasons that we believed that Senator Duffy plus, Senator Duffy also paid back the money. We took that into consideration as well and said he was could have been mistaken. Senator Massicotte: If I could then ask, that's the steering committee, I presume, when you say we? The Chair: Yes, the audit committee of we called ourselves the audit committee for the purpose of this report. Senator Massicotte: The fact that I asked you may wish to comment, Senator Duffy. I presume common sense, if you hear what was said, I presume Table 7 is probably the best summary. I presume they relied significantly upon your travel patterns as summarized in Table 7. The Chair: We're a little bit off the amendment. I'd like to deal with this amendment first, so Senator Massicotte: The amendment, if I could make a comment, I totally agree with Senator Fraser; if you exclude the body of that, a conclusion does not follow. The Chair: Senator Downe. Senator Downe: Well, I'm not on the amendment; I'm on another. The Chair: Okay, then Senator Senator Downe: But I'd like to be on the list. The Chair: Okay. Who's on the amendment, then? Okay, I'll go to you, Senator Carignan, and then I'll go to Senator Charette-Poulin and then Senator Cordy. Senator Carignan, please. [Translation] Senator Carignan: I think that the amendmentI am in favour of the amendment. I think the amendment is logical, in the sense that, if someone says, Okay, here you go, I did something and I am paying it back; I made a mistake and I am paying it back, why would we need a report, or a decision in which the committee issues an opinion or a rationale? So, as I see it, the report could confirm that we have received the letter from the senator, that he has paid the money back, that we have accepted the reimbursement and we move on, in the sense that we do not have to justify the reasons, the rationale, for the decision we made. Technically, we do not have to issue or explain a

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decision. The decision has already been made: the person has admitted that they made a mistake, they have paid the money back, and we move on. It seems logical to me. Let me draw a parallel, even though this is not a trial. If someone pleads guilty, there is not going to be a judgment that will start to explain and show why the person is guilty. The person pleads guilty, the case is closed and we move on to the next one. It is an analogy, of course, this is not a trial, but the logic is the same as I see it. Senator Duffy said I made a mistake and I have paid the money back. Deloitte has verified the amount, the payment has been accepted, and we say, okay, let us think of ways to make sure that this does not happen in the future. I think the amendment is appropriate and we have no need to issue opinions and start to go into any more detail than we already have. Senator Charette-Poulin: Senator Carignan, I am usually in complete agreement with your logic. Senator Carignan: I do not often see you voting on our side. Senator Charette-Poulin: In any legal process and I am very aware that this is not a legal process, but it is a parliamentary process reasons in support of a decision are always issued, especially when the entire process has been public. So I agree with Senator Fraser, as an institution, we must not run the risk of producing a public document that raises more questions than we would like. So let us keep things simple and clear. I agree with removing the final words; it justifies the decision of the committee, which is an institutional one. In all situations of culpability and nonculpability, reasons are always given in public. [English] The Chair: Senator Cordy. Senator Cordy: Thank you very much, and I was actually on the list earlier, and I hope I'm still on the other list. But my comment at that time one of my comments was going to be that I thought that the subcommittee chaired by Senator Marshall did an excellent job of actually talking about what Deloitte brought forward in terms saying there was a lack of clarity. I thought your committee did an excellent job of saying but that's not what we feel and we do feel that there is clarity and that the average person or the average senator would understand what they are doing when they sign the documents. I thought you did an excellent job. My comment originally on the list was going to be that we include some of that language in Senator Duffy's report because if we remove everything that this amendment proposes, basically what we're saying is that the auditors are correct. It's confusing and why did he even bother sending back the money. And I think it's important. I think I thought last night that we all said we disagreed with the auditors, that the language was ambiguous. I thought last night that we said that we agreed with Senator Marshall's committee that, in fact, the language was pretty clear for a reasonableminded person to say that to say what primary residence meant when you were signing your documentation, so I would be against removing part of this paragraph that would add our feelings that we expressed last night. The Chair: All in favour of the amendment? On count, to please: One, two, three, four, five, six, seven, eight, nine. All opposed: One, two, three, four, five, six, seven. Amendment adopted.

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Back to the main report, of Senator okay, I got to make sure I have this list correct. I have Senator Downe, Senator Fraser, Senator Cordy, so let's go to and Senator Massicotte. I am going to go with Senator Massicotte first, actually, because I kind of I had you on the list, and then I took you off the list. Now I put you back on at the bottom. Senator Massicotte. Senator Massicotte: I guess I'm trying to get to the essence of the report, if you Senator you have the right to not respond, as you know, but just to make sure we understand clearly seemingly what the facts are, could you respond a bit to what we heard relative to the our chair in coming to their conclusions, and I presume the most significant table is table 7, and would you comment on our method of travel, your lifestyle, of how you would argue that table 7 is not indicative and, therefore, is contrary to the conclusions of the subcommittee? Senator Duffy: Sorry, senator, I don't understand your question. It's a double negative. Senator Massicotte: Okay, what I'm trying to get at is that the steering committee came to certain conclusions and, presumably, largely based on table 7. You do not agree with their conclusions. Could you explain why is it that your reading of the facts does not permit you to come to the same conclusion as they did? Senator Duffy: I frankly don't know where you're going and I have nothing to add. The Chair: That's fine, senator. Senator Massicotte: I'm just trying to get at clarity, chair. This morning you circulated copies of your correspondence with Senator Duffy, and I'm trying to understand what the intent was. On February 22, Senator Duffy wrote you a letter on behalf of the standing committee on internal asking the internal to say what is the amount that must be repaid in order to settle this matter in full and then fully comply with the rules. On February 27, you responded by basically giving a calculation of what that amount would be. I am trying to understand what the intent of that response was. I presume the intent of Senator Duffy, when he gave you the letter of February 22 is to say: If I pay this amount, I settle this matter in full. The fact that on February 27 you responded without much clarity and not without prejudice, you gave the amount. Would that is the intent of the response, of the internal's response of February 27, was it such that if Senator Duffy paid this amount, he would settle this matter in full as requested? The Chair: No. When Senator Duffy wrote to us requesting to pay it back, we took him at his word, and he said that he wished to pay the money back. We simply wrote him back. He asked how much it was. We wrote him a letter back, you have there. All we did was tell him the amount. He shortly thereafter forwarded a cheque, and we cashed it. Senator Massicotte: Would it not be would it not be appropriate for him to think that when he paid the cheque, given your letter February 27, that that would settle the matter completely, without the need of a special audit or without the need of this debate? The Chair: Well, we did not agree with his letter, and so, I don't think that he would have he should have assumed that, so that the audit was going to continue, and it did. Senator Massicotte: Thank you, chair. The Chair: I've got Senator Furey. Did you want to make a comment on this, Senator Furey? Senator Furey: No I'm fine.

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The Chair: So we've got Senator Downe, Senator Fraser, Senator Cordy, Senator CharettePoulin, Senator Campbell. Senator Downe. Senator Downe: Chair, this is a question for you and the administration. I want to be clear that I have the facts right. So we're finding that Senator Duffy's primary residence is in the National Capital Region and that's why he's paying back the money. The Chair: Well, that was our conclusion. Senator Downe: So when Senator Duffy is in the National Capital Region in the future, he cannot claim expenses on a go-forward basis? Is that correct? The Chair: Senator Duffy in the future cannot claim expense unless he establishes a primary residence in Prince Edward Island. Senator Downe: So when Senator Duffy travels to Prince Edward Island, can he claim expenses there since his primary residence is in the National Capital Region? The Chair: Yes, and he does not claim he claims travel expenses. Senator Downe: Right, but per diem, accommodations? The Chair: I'm not sure well, he doesn't he doesn't Senator Downe: As far as Ottawa, can he not claim any expenses at all? The Chair: I suppose if he leaves his residence in Prince Edward Island, and he has a residence in Prince Edward Island, I suppose if he leaves to travel for an event, I suppose he can he can collect travel expenses and per diems. Senator Downe: But when we're in Ottawa, we get a daily per diem because our primary residence is not here. His primary residence is here. When he is in Prince Edward Island, will he be claiming per diems for the days he's there? The Chair: I don't believe he did. He didn't he didn't claim per diems Senator Downe: No, no, he didn't because we have now have determined his primary residence here. On a go-forward basis, can he claim them? Senator Stewart-Olsen: I don't want to really get into speculation about what could be or might be Senator Downe: No, no, I want to know the policy. We have determined that his primary residence is in Ottawa, so when he travels to Prince Edward Island, is he not entitled to per diems? That's my question. The Chair: He's only entitled to per diems. He's going to his residence. Senator Downe: What are the rules? The Chair: He's going to his residence, so he's only entitled to per diems, as any other senator is, is if they leave their residence and go on Senate business. I think we established the fact that he has two residences. He has one in Prince Edward Island and he has one here. We our assumption is that his primary residence is here; therefore he is not eligible to collect expenses. When he travels to Prince Edward Island and stays at his residence, he doesn't collect per diems. Why would he?

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Senator Downe: Well, because we're all the way from our primary residence, and we're collecting a daily per diem. The Chair: We're in Ottawa, doing business. Senator Downe: Yeah, Senator Duffy could be in you are a senator 24 hours a day, 7 days a week. People could be after him is it the view of the administration, the same as yours, that he would not be entitled to daily per diems. The Chair: I do not know what administration's view is but my view is he wouldn't be el for expenses unless he travelled to an event which was Senate business. Then he would be eligible for expenses, as he would be if it was his primary residence. Senator Downe: Great. Thank you. The Chair: Okay; nice talking to you Senator Downe. Senator Fraser. Senator Fraser: A matter of wordsmithing, chair. On page 4, of the report, Recommendation No. 1, I have two difficulties with it. One is that, as worded, it's, shall we say, less than clear. It says that the repayment was properly reimbursed. That's a double something and possibly ambiguous. I would suggest that we simply say that the living expenses claimed by Senator Duffy from the time of his appointment have been properly reimbursed by him. And I would strike the phrase and is accepted by the subcommittee, because I'm getting into thickets here, but I'm not sure it's the job of the subcommittee to accept payments. Do you see what I mean? I would just take that out. Just say that the repayment that the expenses have been properly repaid by Senator Duffy and go on to recommendation 2. The Chair: George, do you have a problem with that? Senator Furey: I have no problem with it. The Chair: Carolyn? Senator Stewart Olsen: I have no problem with it. The Chair: Then I'm fine with it. Do you think is there a problem with that? I think that's fine. We'll just repeat so that we got it down. This is an amendment. Senator Fraser: I am here as an observing senator. Somebody else has to move the amendment. The Chair: So can someone make that? Senator Cordy: I will make that amendment. The Chair: Would you please repeat it, Senator Fraser? Senator Fraser: That the living expenses claimed by Senator Duffy from the time of his appointment have been properly reimbursed by him, semicolon, and. The Chair: Okay. Have you got it? Or you had it before. You're very good at this, Jill Anne. Okay, all in favour?

CIBA 50154 Hon. Senators: Agreed. The Chair: Approved.

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Any further discussion? I'm going to now call for the vote oh, we've got more people here, sorry. Senator Cordy. Sorry, Senator Cordy, seems like I've been here a long time. Senator Cordy: I totally understand, and I am sure none of us had that great a sleep last night, either. Five o'clock. I am just wondering if you could tell me when the steering committee met the auditors, chair, and when you saw Senator Duffy's report from the auditors. What date? The Chair: Would have been April 16. We distributed it the next day, Tuesday, so that would have been the 17th Ms. Joseph: No, it took almost a week because we had it translated. The Chair: It was 10 days later. Senator Cordy: But the committee saw it. The Chair: Yes, of course. Senator Cordy: Okay, thank you. I'm just wondering, when I look at Senator Duffy's letter dated April 18, and I was a bit concerned by the first paragraph, because Senator Duffy, we know, did not meet with the auditors, nor did he send information to the auditors, although he did request, I believe, on April 20 that he would meet with them but at that point, as of the date on the letter on April 18, he had not met with the auditors, so I'm just wondering when I read it: following our informal conversation, Tuesday evening, and that he went through his files for January 2012, and when we look through his report, we see that the auditors actually picked up on page 18, 6.3, when we see the period of time that he refers to in this first paragraph, is a time when he actually claimed expenses, per diems, when he was in Florida, and this letter suggests that after the informal conversation that he went through the files for January 2012 and discovered that there was a clerical error. I'm just wondering in the informal conversation, I'm just wondering how Senator Duffy knew that was in the auditor's report about the expenses for January 2012? Senator Duffy: Mr. Chair and Senator Cordy, maybe I could that's an error on my part. I told him we all are human, senator, we all make mistakes. Senator Campbell: Give me a break. The Chair: Senator Campbell, lets just go ahead, Senator Duffy. Senator Duffy: My memory of that conversation is that in going through my files I had discovered this, and I mentioned it to Senator Tkachuk that I found a problem. That was our informal conversation. He said write me a letter and explain it, and that's what generated the letter. I did not know what was in your report. I had been doing my own review in my office, and I said: I've come across this. How do I deal with it? I hadn't yet spoken to the auditors. I'm making an offer to speak to them, and that was the informal conversation. I said how do I deal with it, and he said write me a letter and explain what you have found and I'll pass it on to the auditors. So it really should say: As a result of our informal conversation, I am writing you this letter.

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Senator Charette-Poulin: Supplementary: Senator Tkachuk, did you talk to Senator Duffy about the internal audit report in that informal discussion? Senator Tkachuk: I did. We had received we had received a we had received a verbal, a report, on Senator Duffy where this item was, that there was one day, and, I, of course, wanted to find out whether there was more than one day, and so I bluntly asked a question. Senator Charette-Poulin: Supplementary: Did you discuss the internal reports with the other colleagues? The Chair: Well, I wasn't seeking information on the other colleagues. I didn't have any information on the other colleagues. That was a separate committee. This was our committee, so I was just trying to find out whether there was more than one day. Senator Charette-Poulin: I'm I'm really feeling uncomfortable. With all due respect, and I do not know how we should proceed. The Chair: I'm not sure why you feel uncomfortable. Senator Charette-Poulin: Well, in all the meetings that we had at internal economy to ensure objectivity, because everyone was feeling uncomfortable in the situation, but to ensure objectivity, to ensure fairness, to ensure transparency, I was always under the impression that everyone would be treated very fairly. The Chair: They were. Senator Charette-Poulin: That's No. 1, but No. 2, all information obtained by even the steering committee of internal was not shared with me as a member of internal until we had a formal meeting, so I'm sensing an irregularity in the process, Senator Tkachuk, that information was shared with one of the people involved in the audit process. That's what I mean. I'm discovering, to my surprise an irregularity and The Chair: I simply asked a question of Senator Duffy. That's what I did, so I asked a question of finance as well. I wanted to know what this was about. Senator Charette-Poulin: But in asking a question, you disclosed confidential information with all due respect I dont want be harsh here. The Chair: It would have been confidential if Senator Duffy would have been appearing before them, he would have discussed it with them, but he did not. Senator Charette-Poulin: Absolutely, but in due time in the process, but it was not during the due process. It was outside the due process. The Chair: Senator Cordy. Senator Cordy: Thank you. The Chair: Still here. Senator Cordy: That was supplementary, and I am also troubled, too. We've talked about confidentiality all the way along and we're reading things in the paper, and then to look at the Auditor General's report sorry, not the Auditor General Deloitte report on page 18, where they talk about the expenses claimed while Senator Duffy was in Florida, and then to read the letter, and whether Senator Duffy made a mistake or not, the point of the letter is that the chair, the committee and Senator Duffy discussed his expenses from January 2012 that are in the audit report, that none of us on the committee had seen, other than the subcommittee, and that you have actually relayed that information by way of questioning, or however it was done, Senator Duffy certainly would have left

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your conversation knowing that he had better look at his expenses of January 2012 and pay them back. And paying them back was a positive thing, but I am very troubled by the fact that this conversation took place with Senator Duffy, that Senator Duffy was given a heads up, that this was in the audit report. You said that Senator Duffy didn't meet the auditors but that was his choice to make, that he chose not to meet with the auditors until April 20. That was his choice to make, so he wasn't able to do that. I'm just wondering, related to that claim in January, Senator Duffy, you would have had to sign the expense form to get that per diem money, so you did sign that claim? Senator Duffy: My regular assistant was on the short answer is yes. My regular assistant was on maternity leave. I had a staffer temporarily, Diane Scharf. Some of you may know Diane. I've known her for 30 years. I signed in a hurry, thinking I was signing a vacation, because it listed all the dates, of vacation, an attendance sheet. In fact, it was the wrong form and I take full responsibility because as a senator you must be responsible for everything you sign. Senator Cordy: I'm not doubting your word. I have been here for almost 13 years. I have never signed a vacation form for myself. Senator Duffy: An attendance form. I signed one yesterday. Anyway, I signed it in error. The Chair: Okay, sorry, Senator Cordy, further questions? Senator Campbell. Senator Fraser: Mr. Chair could we break up the caucus please? Could we have a few minutes? The Chair: Sure, we have how long do you think? Ten minutes? Senator Fraser: Till quarter to. The Chair: Well have a 15 minute break. We'll reconvene at quarter to the hour. (The committee suspended.) (The committee resumed.) The Chair: I call the meeting to order. Senator Campbell. I have you on the speaker's list, and I have Senator Charette-Poulin. Senator Campbell: No. The Chair: Senator Tardif. Senator Tardif: Thank you chair. It's obvious by what occurred just before we asked for a break, that there was a serious breach of confidentiality that occurred in the process. It was highly improper that the chair entered into discussions with the senator in question and that there was information that was given. It's an egregious breach of procedure. I feel that the process has been tainted and that we need to recommence. The Chair: We need to what? Senator Tardif: To restart the process. The Chair: Senator, I want to remind Senator Tardif and all honourable colleagues that I am the chair and was the chair of the audit subcommittee. As the chair of the audit subcommittee who had

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commissioned the audit, I do not feel there was any breach of confidentiality and it was certainly there was no process, whatsoever to hide any information. All of this was in the report, well known to all people who read the report and known to the steering committee who had the report early in the week. So there was nothing hidden here, and so I don't believe that there was a breach of confidentiality. Any other members here wishing to speak on the speaker's list? If no other members, then I'm going Senator Cordy. Senator Cordy: I hope that we're not trying to rush quickly and get things done. The Chair: Senator Cordy, I have been more than generous with time and have tried to have plenty of opportunity for discussion, so Senator Cordy. Senator Cordy: Thank you very much. I agree with my colleague, Senator Tardif. I do believe there was a breach of privilege. I didn't see the report before you had your discussion with Senator Duffy. Senator Harb and Senator Brazeau were not given any heads up, to the best of my knowledge, on what was contained in the audit report. The Chair: Senator Brazeau met with the audit subcommittee. Senator Cordy: And that was his choice. The Chair: Exactly. Senator Brazeau met with the audit subcommittee. Where was the breach there? Senator Brazeau met with all three members. Senator Cordy: And Senator Duffy did not want to appear before the auditors. The Chair: I'm just telling you, I'm just giving you the facts. I'm not trying to interpret what people are saying Senator Cordy: I'm not getting into an argument. I'm just saying when I read the letter that was sent to you from Senator Duffy, I find it very troubling, and I do feel there was a breach. Senator Charette-Poulin: Again, with all due respect, Mr. Chair, we had agreed on a process. And following the discussion before we met in caucus, we have identified a serious breach. I move that because of the information obtained during that discussion, that we restart the audit of the expenses of Senator Duffy. Senator Duffy: Maybe if it would help the committee: There was no information shared with me. There was a question raised with me when I had a conversation with the chair, and there have been ongoing conversations about meeting with Deloitte, with other things, when can I messages passed back and forth about logistics. When will I hear? You know, you saw the letter where I said how much would settle all of this, so there were conversations about logistics, not details of the audit. The Chair: Senator Carignan. [Translation] Senator Carignan: Look, I think that it is the responsibility of the Chair of the Committee on Internal Economy to make sure that the expenses are in order. I feel that he fulfilled his responsibility in good faith. I do not see any error of the kind you are bringing up. Even accepting that it might be an error which it is clearly not, in my view you are asking to start the process all over again. What is the connection? There is no connection between what you see as an error and the solution you are asking for, meaning starting all over again. Would starting all over again correct the error you are criticizing Senator Tkachuk for? All it would do is delay the conclusion of this matter. The Deloitte auditors came here and did a really

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amazing job of collecting data, gathering information. I do not see the point. They would probably uncover again the things that went on here. They would do exactly the same job and come to the same conclusions. The rules were not clear for them and I do not see how they would be any clearer if they did it again. Expenses were claimed. We have cheques, we have receipts, we have the claim forms that they submitted. The amounts are not going to change. That is the Deloitte report. Absolutely nothing is going to change, even if we do the whole process all over again. I do not think that we should get into political games with this kind of file. We are playing with the reputation of this institution and with the reputations of senators. This is not the place to play politics. [English] The Chair: Senator Cordy, Senator Charette-Poulin Senator Tardif Senator Cordy do you wish to speak? Senator Charette-Poulin? [Translation] Senator Charette-Poulin: I do not think anyone has ever accused anyone of being ill-intentioned at all. Far from it. So, with all the respect we owe each other, what we have identified is a serious irregularity in a process that the Committee on Internal Economy discussed. Given that the irregularity has been identified, as well as two of our colleagues clearly contradicting each other, as I need not repeat, doubt has been cast on the legitimacy of the process. So we know what we know, but what do we not know? I made the motion that we have on the table so that the process can be truly above board: the motion is to redo the audit of all Senator Duffys living allowance claims. That is number 1. [English] The Chair: Senator Tardif. Senator Tardif: Chair, this is not a question about it being a political process. This is a question about procedure, transparency, respect of confidentiality. This is what is at stake here, and if something has tainted the process, then we need to know what was not known and what could have been, had this process not been tainted, and so I support the resolution made by my colleague. The Chair: Senator Downe. Senator Downe: Chair, you were the chair of the audit committee, the subcommittee, as well. Senator Marshall was the chair of the other committee. Senator Marshall, did you disclose any of the information, other two reports, to the two senators before they were presented to the committee? Senator Marshall: No, I did not. The Chair: All in favour of the motion? Senator Furey. Senator Furey: Before we go to vote, we were asked to break at 10 o'clock to give the leadership on both sides an opportunity to, for 10 minutes, to go and do what it is they have to do to prepare for this afternoon. Can we do that now and maybe give us a chance? The Chair: All in favour of the amendment? All in favour of the motion made by Senator Charette-Poulin all in favour? Senator Charette-Poulin: Wait a minute, your vice-chair here has just proposed The Chair: We've got three minutes before 10 o'clock. Right now, I have a motion on the floor. All in favour of the motion?

CIBA 50154 Senator Downe: I have a question.

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The Chair: All in favour of the motion? Senator Downe: Can I ask a question? I want to ask a question. The Chair: Ask a question. Senator Downe: Thank you. Senator Marshall, I'm just wondering, in your experience as a former Auditor General, in your professional experience, is it advisable to alert members who are under investigation of any report of any of the subject that's under investigation prior to the release of the report? Have you ever heard of that being done? Senator Marshall: Yes, actually, during an audit we have done that. In fact, we would the auditee, we would share a lot of information with them. Senator Downe: And then the person has an opportunity to present their answers to those questions in a formal manner. They respond to the allegations Senator Marshall: Whatever that response would be. Right. Senator Downe: Another chartered accountant here is Senator Massicotte. Does he concur with that opinion we just heard from Senator Marshall? Senator Massicotte: I think it would be normal practice when you develop an audit report or a forensic audit report that you discuss the conclusions, the details included in your report to test the validity and to test the substantive conclusions. Senator Downe: And then the person has a recourse, again, to present their side of the argument and rebut if he will? Senator Massicotte: For the purpose the committee would want to make sure the conclusions are accurate because it's amazing sometimes how much we develop opinions that, which may be erroneous until you find out the other person's argument, so it's to make sure the conclusions are strong, coherent, so it would be very normal you would share your details, your facts, to put them, to test them. Senator Downe: I appreciate your professional opinion. The Chair: It's 10 o'clock now. We're going to take a 10 minute recess for the house leaders to meet, and we will meet at 10 after the hour. (The committee suspended.) (The committee resumed.) The Chair: Any further discussion? No further discussion. There is a vote Senator Fraser, Senator Charette-Poulin. Senator Fraser? Senator Fraser: I yield to Senator Charette-Poulin. Senator Charette-Poulin: I would like to thank Senator Marshall and Senator Massicotte for their information as professionals. And it's based on that information and having gone through the experience of audits in my previous lives that I am aware that auditors do speak with different people before the report is finalized to ensure the credibility of the report and the facts, the lining up of the facts.

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But that's exactly my point, which, actually, motivates my motion that I would like that the review of Senator Duffy's housing allowance expenses be reopened and submitted to the subcommittee chaired by Senator Marshall. That's exactly my motivation behind this motion. The Chair: We have a motion on the floor. Senator Charette-Poulin: It's a clarification of the motion. The Chair: You're making an amendment to your motion? Senator Charette-Poulin: Could you repeat my earlier motion because it then Mr. OBrien: I have because of the breach of confidentiality in the course of the audit that the committee restart the audit of Senator Duffy's expenses. Senator Charette-Poulin: Well, it's the restart of the audited through it's through the submission to the subcommittee chaired by Senator Marshall. I wouldn't want them to go back to Deloitte. The Chair: All in favour? All opposed? Motion falls. We're now on the main motion, which is the report on Senator Duffy. Any further discussion? Senator Furey. Senator Furey: Chair, there is a possibility that our leadership may raise a question of privilege on this, and I'm wondering if it's appropriate if our Speaker remains for the rest of the discussions based on that information. I'm I'll be led by the committee. I do not know if it's appropriate or not appropriate. Maybe Senator Kinsella, if you give us a comment on that. Senator Kinsella: Well, I always operate on the basis of being a historian and not a prophet, so not knowing what's going to happen in the future, I have no basis on which to make a decision. The Chair: We will go to the main motion. All in favour Senator Duffy, did you wish to say a few words? Senator Duffy: Just, if we're on the main motion, I just want to take a minute to say to everyone here, I want to thank you for your courtesy during this difficult time. I was honoured to be appointed to the Senate of Canada. This is an institution that I hold in the highest regard, and I have always sought to conduct myself in a manner consistent with the dignity of this important piece of the Canadian constitutional framework. I regret the controversy, and that's why I unhesitatingly refunded more than $90,000. I did not want controversy to further damage the reputation of this fine institution. The Chair: All in favour of the report of the main motion of the audit subcommittee? All in favour? Some Hon. Senators: Agreed. The Chair: All opposed? Motion carries. We're now going to go to Senator Harb's report. Senator Duffy: May we be excused? The Chair: Yes, you may.

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There is no further discussion on Senator Harb. All in favour of Senator Harb's subcommittee report? All in favour? All opposed? Abstentions? Carried. We will go to the Senator Brazeau's report. All in favour? Opposed? Carried. Abstentions? Thank you. Do we need a motion to report? We need a motion to report all three reports. All in favour of reporting it to the Senate as reports of internal economy? Senator Furey: Can we say that that's reported as a majority report? The Chair: Yes. We will do this again. All in favour? Any opposed? Abstentions? Carried.