Party of One (53 page)

Fraser stayed with Ernst & Young at the Quebec City office until the then auditor general of Canada, Denis Desautels, called with an invitation for her to come to Ottawa. After listening to his pitch, she made the jump from the private sector to government. Two years later, Fraser was approached by other staff in the auditor general’s office to let her name stand for the top job. Although the position of auditor general (AG) was rarely filled by anyone currently serving in the office, Fraser applied. She was quizzed by the then president of the Treasury Board, Madame Lucienne Robillard. The interview, which began in French, was supposed to last an hour. It ended after a mere thirty-five minutes. Sheila didn’t know if she had impressed her formidable interviewer or bombed. It would be two months before she was informed by the Privy Council Office that she had landed the biggest auditing gig in the country.

In her career as AG, Sheila Fraser worked with three prime ministers. The first was, Jean Chrétien, whom she never met in person—though she told me that their relationship was “professional.” Given the deep shadow cast by the sponsorship scandal over Chrétien’s last government, that is something in the order of a small miracle. Although Canadians would come to admire and trust “Sheila”
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for her exposure of the Liberals’ stunning abuse of public funds, few understood just how difficult it was for an auditor general to hold any government to account. The decision to take such a risky step depends as much on the mettle of the office holder as on the statutory powers of the office itself.

For one thing, politicians constantly try to use the auditor general’s office as a weapon in their partisan wars. That’s why Fraser did not generally accept the frequent requests from individual politicians for audits. She wanted to maintain the independence of her office, which ideally meant that the AG decides which audits to undertake. But when it came to requests from cabinet ministers or parliamentary committees, it was Fraser’s practice to look into the matters they raised. Conducting full-blown audits was tough enough; with all the power and ego of politics thrown in for good measure, it made an already thorny task even trickier. With a strategic adjustment of her famous bifocals, Sheila Fraser had a way of winning most of the staring contests. “Every audit begins with two lies,” Fraser explained to me. “They say ‘Glad to see you’; we reply ‘we’re here to help.’”

When it came to the ad sponsorship program, it was Liberal Dan Boudria in his capacity as minister of public works who requested the audit. Persistent questions had been raised in the House of Commons about two contracts with a Montreal firm called Groupaction, each worth $500,000. Fraser thought that the minister’s request was transparent: “I have always believed that the political motivation was to take the subject off the radar.” But if Boudria thought that the sponsorship scandal would disappear into a bureaucracy that moved at geologic speed, he was in for an unpleasant surprise. Fraser got his request for the audit in March 2002. She called her audit team together and set it an ambitious agenda; she wanted the investigation completed in the current parliamentary session.

Just over two months later, the AG must have thought she was reading a thriller by her favourite author, Louise Penny, rather than a government report. Her team confirmed two very dodgy contracts, and came up with a third one the opposition hadn’t known about. It was the stuff of fiction: the sponsorship
scandal had tendrils everywhere. Sheila immediately ordered a government-wide audit. In her report to the Chrétien government, she notified Minister Boudria that she had also referred the matter to the RCMP.

What made the situation “extremely offensive” to Fraser was that internal audits had already revealed problems with ad sponsorship contracts, yet nothing had been done. And that was despite the fact that the person in charge of the program was the prime minister himself. An estimated $100 million had been funnelled to government-friendly ad agencies in Quebec, for which the public got little or nothing in return. “I was really shocked that all this was happening in an era of cutbacks,” Fraser told me. “Money was being spent, millions of dollars, for nothing. Even the RCMP was in on it.”
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TV Cinq in France picked up the story, and it was quickly shared with French-speaking countries in Africa. At an international conference of supreme auditors in Budapest, African auditors general approached Auditor General Fraser with questions and deprecating comments about the sponsorship scandal. There was considerable embarrassment, she recalled, because “we were supposed to be a world model of good governance.”

The sponsorship scandal marked the bitter end for the little guy from Shawinigan, and a rocky start for his successor. Sheila Fraser may never have met Jean Chrétien, but she and Prime Minister Paul Martin kept running into each other by “happenstance.” At one such chance meeting in Europe, Martin quipped, “Sheila, we’ve got to stop meeting like this.” Although she noted that Martin and his people could be “quite nasty” (Martin’s president of the Treasury Board, the late Reg Alcock, had tried to cut the AG’s budget), Sheila described her relationship with the new prime minister as “polite and correct.” That rapport was remarkable, given that the AG’s final report on the sponsorship scandal
landed on Martin’s desk just two weeks after he assumed office. “It caused an enormous flurry,” Fraser recalled.

Indeed. The report left the newly minted prime minister faced with one of the deadliest dilemmas in Canadian political history: whether to hold a public inquiry into an episode so sleazy that it threatened the foundational credibility of the Liberal Party, or to brazen it out. If Martin went ahead with an inquiry, it also stood to overshadow his laudable stewardship of the economy as minister of finance, which had included taming Canada’s deficit, paying down the debt, and recording seven straight budget surpluses.

Martin did the right rather than the political thing. He went with an inquiry and left it to Mr. Justice John Gomery of the Quebec Superior Court to lift all the rocks in the sponsorship affair—a decision that blighted his prime ministership and mortally wounded his party. But it also gave the country a degree of closure on one of the low points in Canada’s national life—and garnered respect for Martin on the long hours of the historical clock.

Rather than shooting the messenger—in this case, Sheila Fraser—Martin’s approach was to deal with issues outside of the scandal fairly, and as they arose. Fraser wanted to see, for example, what the Liberals had done with huge surpluses Martin had built up after reducing dangerously high deficits from the Mulroney era. Ten billion dollars had been moved into special “foundations” such as the Innovation, Millennium, and Scholarship funds. The oddity about these transfers was that the government did not control the money. Instead, it was administered by a board of directors. If the fund failed, the remaining money in it did not go back to the government but rather to those who had been receiving it. The auditor general wanted that changed. Following her recommendation, the prime minister agreed to put the finances of these cash-rich foundations back into the financial statement of the Government of Canada. Although Fraser concluded after investigating that the
board of directors had actually done a “pretty good job” of managing the money, the funds were now more accountable and transparent.

Despite the devastating impact of Fraser’s work on his government, Prime Minister Martin actually increased the powers of the auditor general. After the scandal, the AG was given access to all Crown corporations, including Canada Post, whose boss, André Ouellet, had famously refused to cooperate with her office. The only exception under Martin’s reforms was the Bank of Canada. “There is some preoccupation with the independence of central banks,” Fraser told me with a wan smile.

Shortly after the 2006 election, Sheila Fraser had a personal meeting with the third prime minister of her public service career, Stephen Harper. It took place in his office in the Langevin Block. For the most part, the relationship was “fine.” One difference the AG noticed was that while she still worked closely with senior bureaucrats, Harper ministers were less accessible. From the very beginning of their dealings, Harper also tried to persuade Fraser to modify the powers of the auditor general. As stated in the Conservative election platform, the PM planned to grant the AG power to audit all loans and grants over a million dollars. On the surface, it looked like a responsible means of keeping a sharper eye on taxpayers’ money. But was it also a clever way of usurping the AG’s options, and more important, her independence? Would it turn an auditor into an exalted management consultant?

Fraser demurred. For one thing, accepting the PM’s reforms would mean that her office would be inundated with an avalanche of small audits—something she didn’t think was an appropriate task for the auditor general. It was up to agencies such as the Economic Development Corporation and the Federal Business Development Bank to devise their own financial administration systems, which would then be audited by the AG. The prime minister was “very courteous” in climbing down from his suggested
reforms—though, as a lot of people would learn about him, he had a way of circling back until he got what he wanted. But the auditor general is a powerful player. “They didn’t want to mess with me,” Fraser recalled.

Inevitably, Harper did take her on. Fraser doggedly stood her ground. The collision took place over the interpretation of the order-in-council that laid out the rights of the auditor general to information—a confrontation she attributed as much to overzealous justice department lawyers as to politics. In those early days, Fraser perhaps underestimated the degree to which information control would become the central obsession of the Harper government. The Conservatives wanted virtually everything to be a cabinet confidence, a demand that would have placed the government’s actions beyond the scrutiny of the auditor general. (As it is, the Ministries of Information Technology and National Security enjoy that status.) Even though the Treasury Board Secretariat had a role in Information Technology programs (the auditor general’s meetings with the Treasury Board and the Secretariat were important because both briefed cabinet), even that body wanted to refuse all documents to the AG, including emails between bureaucrats.
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Sheila Fraser eventually got the Harper government to adopt a new order-in-council clarifying the access rules from the 1980s in her favour. Perhaps there was a soft spot for the AG’s office in certain quarters of the Conservative administration. John Baird’s stepmother had once worked in the office and the future Treasury Board president had “read AG reports as a kid.” But soft spot or not, Fraser didn’t get everything she wanted from Stephen Harper. Although the AG had the right to see cabinet directives, for example, she was shown only the final decision, not the drafts. The distinction is significant. Only the drafts of those decisions contain the reports and the rationale upon which cabinet has acted.
Holding those drafts secret, Stephen Harper’s decision-making process was still opaque. The struggle over access to information taught Fraser that the AG’s office had “always” to be vigilant on matters of interpretation with the Harper government.

Vigilance was also the order of the day when it came to how the Harper government tried to piggyback on Sheila Fraser’s universal reputation for probity. When the Conservatives hosted the G8 and G20 Summits in Ontario in the summer of 2010—spending $1.1 million on posters and even using taxpayers’ money to construct a fake lake—they faced a firestorm of opposition criticism. The event was notorious in its own right, with mass arrests and the kettling of innocent bystanders by overly aggressive police, who were later found to have abused their authority. In an odd way, the over-the-top Liberal ad showing troops in Canadian cities that appeared on the party’s website during the 2006 election found its haunting echo over that weekend in Toronto—some ten thousand uniformed police and another thousand private security guards were deployed.

But the self-styled prudent managers of the Harper government had also burned through nearly a billion dollars of taxpayers’ money in hosting the planet’s potentates. It was ten times the amount anyone else had ever spent on these events—and ten times the deplorable financial waste resulting from the sponsorship program. The Harper government’s largesse included $50 million for widespread and unauthorized rural renewal of cabinet minister Tony Clement’s Muskoka riding (site of the G8 Summit)—monies lifted from the Canada Border Services budget and never separately approved by Parliament. Sheila Fraser was not impressed. “Look at the fuss over $900 for an honour guard the RCMP had to repay and it makes the point,” Fraser told me. “Yet $50 million blown in Tony Clement’s riding didn’t get a hearing. It was completely unacceptable from a financial administration point of view.”

Given her feeling about “Gazebo Tony” and public washrooms built 20 kilometres from summit venue sites, “unacceptable” was about to become “outrageous.” At the height of opposition attacks, the Harper government reported to Parliament that the auditor general herself had praised its summit spending. “I never said that,” she recalled thinking when she read the false report. “What the hell are they talking about?” In fact, the quote used by the Conservatives had been uttered by Fraser—but in praise of a former Liberal government initiative from years earlier. Outgoing Harper cabinet minister Stockwell Day later apologized to the AG, who graciously accepted the government’s claim that the misleading quote had not been issued intentionally. “Still,” Fraser told me, “you would think someone might have checked before making that kind of public blunder.”

Other attempts were made to exert control over Fraser’s office. The Harper government tried to force the auditor general to seek approval from the minister of finance for any expenditure over $5,000, a gauche attempt to remind Fraser’s office who was really in charge. Fraser took the battle straight to the clerk of the Privy Council, Wayne Wouters. “There was no way we were going to have an expenditure of the office okayed by politicians or ministers.” The “offensive section was removed”—with one exception. Harper refused to permit the auditor general to run recruitment ads for her office bearing Canada’s coat of arms—a practice adopted by Fraser expressly to assert independence from the government. As an item of “communications policy,” Harper insisted that any advertising from the AG’s office had to be accompanied by the Canada logo.
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On the issue of branding, this was a Conservative priority carried to outlandish and, some have argued, improper lengths. Harper never budged, the AG never blinked, and the ad never saw the light of day.