NATIONAL

SINCE RADWANSKI, OTTAWA'S TOP 99 BUREAUCRATS HAVE SPENT $14,000,000 ON TRAVEL AND HOSPITALITY IN A SYSTEM RIPE FOR ABUSE

CHARLIE GILLIS,MICHAEL FRISCOLANTI May 29 2006
NATIONAL

SINCE RADWANSKI, OTTAWA'S TOP 99 BUREAUCRATS HAVE SPENT $14,000,000 ON TRAVEL AND HOSPITALITY IN A SYSTEM RIPE FOR ABUSE

CHARLIE GILLIS,MICHAEL FRISCOLANTI May 29 2006

SINCE RADWANSKI, OTTAWA'S TOP 99 BUREAUCRATS HAVE SPENT $14,000,000 ON TRAVEL AND HOSPITALITY IN A SYSTEM RIPE FOR ABUSE

NATIONAL

CHARLIE GILLIS

MICHAEL FRISCOLANTI

The fraud and breach of trust charges against him were said to be the final note in a crisis that, thankfully, had passed. George Radwanski had been some public servant—a dimestore Napoleon who, in the memorable words of auditor general Sheila Fraser, waged a “reign of terror” against staff who dared question his lavish ways. In two years, the paper trail shows, the then privacy commissioner spent taxpayer dollars as if living in the last days of disco, and when his $500,000 in travel and hospitality bills finally came before a parlia-

wasted tisked. the mentary no called Editorialists RCMP-acting in to committee time in audit shunning Radwanski’s fulminated. on in 2003, him. flagrant official Politicians expenses, abuses Fraser Ottawa and was she uncovered—opened their investigation. Those who make their living on Parliament Hill have been eager to close the Great Book of Government Excess. The scandal, pundits and politicians assure us, has produced a “cultural shift.” No more meaningless junkets. No more boozy dinners. As proof, they point to rules passed by the Paul Mar-

tin government requiring all senior bureaucrats, cabinet members, parliamentary secretaries and ministerial staff to post their travel and hospitality expenses on depart-

mental closure,” mouse-the their ever chance top-level websites. and it airline to gave federal scrutinize—at It’s Canadians tickets employees. called and “proactive their the firstmeal For click of this tabs and disof a other reforms, Canadians owe Radwanski a “debt of gratitude,” declared Pat Martin, a New Democrat MP who sat on the Commons committee that uncovered his misspending, “People are far more scrupulous with expenses now,” he told the Ottawa Citizen. “If anything, the pendulum may have swung too far.”

Actually, a closer examination of the thousands of expense reports online suggests the proverbial pendulum has barely swung at all. Consider this: between December 2003 and

AUDITORS SCOLDED JUSTICE OFFICIALS OVER A $16,000 CONFERENCE CANCELLATION FEE

December 2005,99 senior officials spent more than $100,000 each on travel and hospitality, including nine who topped $200,000, and one—the ambassador to France—who broke the $300,000 mark. But good luck finding that figure on a government website. Parliament’s idea of “disclosure” is to post a mélange of unrelated, unaudited and in some cases incomplete figures that offer neither context nor comfort. No grand totals—not by individual, not by department and certainly not government-wide. A citizen curious to know how much senior Immigration officials spend on travel and hospitality will need a few spare hours and a calculator.

Maclean’s combed through the data, using a spreadsheet to tally, rank and average the expenditures of more than 1,700 senior ministers and civil servants, totalling $46 million. Buried in the online filings is an array of dubious purchases, from a $12,000 plane ticket to South Africa to scores of pricey airfares of a senior civil servant who commuted between Vancouver and Ottawa. There’s a $7,600 bill for a cocktail party, and $12,166 to send a “special envoy” from the Department of Fisheries and Oceans to a meeting on the remote Pacific shores of Easter Island. Departmental audits show similar patterns of excess and bungling among rank-and-file employees: Justice officials upbraided for paying out a $16,000 fee after the last-minute cancellation of a conference at a luxury hotel; Fisheries workers spending $81,000 more than they should have on plane tickets that could have been had for a fraction of the price. Missing receipts, unapproved claims, trips that look suspiciously like holidays— they’re all part of a billion-dollar travel and hospitality regime that, after more than a

decade of attempts at reform, federal beancounters admit they still don’t fully grasp.

Some government officials Maclean ’s contacted dismissed the exercise as overreaction. Travel and hospitality, they said, represent a mere fraction of federal spending, and the press tends to overplay rare instances of misconduct. But most acknowledged that the current situation can’t hold. Ottawa’s overall travel spending has reached $1.2 billion per year, yet the government lacks the tracking and discipline any company spending a modicum of that amount would employ to control the outflow of cash. It is a recipe for abuse, say critics, and for taxpayer anger. “There is a price to be paid for exploitative behaviour by civil servants,” says Arthur Schafer, director of the Centre for Professional and Applied Ethics at the University of Manitoba, “and that price is public trust. Civil servants are in a trust relationship with the Canadian public, and that’s much more important than the actual cost of first-class travel or fancy wines or decadent dinners.”

What constitutes too much is a matter of debate, of course. But the discussion might begin with John Watson, a mandarin appointed to the Privy Council Office (PCO) in late 2003 to oversee Aboriginal policy for then prime minister Martin. A former regional director of Indian and Northern Affairs in B.C., Watson was living on the West Coast when called to the capital for a one-year term. But the brevity of his appointment exempted him from federal guidelines requiring him to move, and when the term came up in early 2004, the govern-

ment simply renewed it. Watson, as a result, spent more than two years using airlines as others might use subways, commuting between Ottawa and his home in Vancouver at the astounding cost to taxpayers of $234,849The total was good for No. 4 on the list of big spenders, ahead of all cabinet ministers and well above many individuals whose jobs actually require global travel. By comparison, the former minister of international development, Aileen Carroll, spent $168,861 during a similar period.

During his stint in the PCO, Watson boarded 50 flights per year to travel to and from work, and lived in hotels during what were typically week-long stays in Ottawa. In 2005 alone, he spent 209 nights in the capital, at a cost of $21,966.57. For the same amount, the feds could have rented him a luxury apartment at $1,800 per month.

His did not, in fairness, sound like an especially pleasant life. Living from a suitcase, eating airline chicken, and staring at the bland decor of Air Canada’s Maple Leaf Lounges is hardly an advertisement for a public service career. And no one disputes Watson’s value in the sphere of Aboriginal affairs. While he did not answer an interview request, a PCO spokeswoman who responded on his behalf said his relationships in the native community were crucial in the development of the Kelowna accord, whose principles the current Conservative government is using to build its own Aboriginal policy.

But neither did Watson, his staff or his bosses make any apparent effort to save money under the circumstances. His hotel costs ate up thousands, and because his senior rank allowed him business-class privileges, he almost never booked a ticket for less than $2,700. A simple Internet search on Air Cana-

HIS OTTAWA-VANCOUVER COMMUTING COST $234,849

A DINNER AT NOCE, NOT INCLUDING ALCOHOL, RAN $167 PER PERSON

da’s website shows that, by reducing himself to economy for, say, 10 round trips per year, Watson could have saved taxpayers more than $40,000. Had he reduced the frequency of his travel by half, he would have saved more than $100,000.

To John Williamson, federal director of the Canadian Taxpayers Federation, it is a remarkable case of bureaucratic presumption, and systemic incompetence. “If the job’s in Ottawa, you ought to be in Ottawa,” he says. “I don’t think anyone is that valuable.” But Watson’s bills, the online filings show, were part of a pattern within government’s senior ranks that suggested both an attitude of entitlement, and an absence of checks and balances. Some examples:

• Norine Smith, an assistant deputy minister at Environment Canada, flew to 14 foreign destinations and racked up $105,621 in travel expenses over a seven-month period in 2005 to discuss global warming with international counterparts. Her claims included an $8,544 ticket to Paris (price of a business class seat, with advance booking: $3,550) for “a high-level special session on the cost of inaction.” This, ironically enough, while Smith’s own department was commissioning a study on how aviation emissions contribute to global warming.

• Canada’s mission in Paris must count among the most popular venues on the European diplomatic circuit. The ambassador, Claude Laverdure, spent fully $311,800 during our survey period, the vast majority on hospitality. His filings are a compendium of lunches “in support of visiting dignitaries,” receptions billed as “advocacy to Canada’s public policy,” and cocktail parties that ran the taxpayer as much as $7,600. Granted, Paris is an expensive place to do business. But then so is Tokyo, and our ambassador to Japan, Joseph Caron, spent less than half what Laverdure did during the same period.

• Media handlers and public relations people are racking up large bills, too. Last October, Sandra Lavigne, director of public

affairs for the Canadian Food Inspection Agency, took a 10-day trip to New Zealand to attend a conference on mad cow disease. Airfare: $7,72791Denise Rudnicki, a communications director in the Department of Justice, spent $3,678.31 for a round-trip plane ticket to Edmonton, while Sarah Bain, a press secretary in Social Development Canada, spent $3,565.60 on a similar ticket to Vancouver.

• In December 2003, Richard Normandin, the vice-president of the National Research Council of Canada, spent $7,946.93 on a round-trip flight to Hawaii to attend a directors meeting of something called the Canada-France-Hawaii Telescope. An NRC spokeswoman said it was the lowest available fare at the time, adding: “We’re normally very careful about what we spend on travel.” But our own searches found that, with a few weeks’ notice, an executiveclass ticket to Honolulu from Ottawa can be obtained for $2,442, even in peak season.

• Donna Petrachenko, a senior Fisheries official, spent $112,000 visiting Pacific Rim countries over two years as Canada’s representative at, and for a time chairperson of, a little-known APEC group called the Integrated Oceans Management Forum. Her travels—including the $12,000 trip to Easter Island—were part of an ocean conservation initiative. To date, however, the group has produced little more than vaguely worded reports.

• On Sept. 20,2005, Anne McLellan, then the minister of public safety and emergency preparedness, Jean Lapierre, then the transport minister, and nine other senior officials rang up $1,842 at Noce, a posh Toronto restaurant, during a four-hour dinner meeting “to discuss the Windsor border file.” Leslie Swartman, Lapierre’s chief of staff, picked up the tab. When contacted by Maclean’s, Swartman described the dinner as a rare opportunity for department heads to “hash out this issue altogether.” Wine was served, she said, but it wasn’t charged to the public purse. Still, that means each person’s dinner cost taxpayers

an average of $167—not including alcohol. “I recognize that,” Swartman said, when told that some Canadians might be offended by such a hefty bill. “Had I known it was going to be as expensive of a restaurant, I probably would have done it somewhere else. But you don’t really find that out until you get there.”

These instances by no means suggest Radwanski has a modern-day equal. There are no unexplained travel advances, no $10,000 tabs at ritzy Ottawa eateries, no $444 receipts amateurishly blotted with Liquid Paper. Still, they are conspicuously out of step with the government’s own travel and hospitality guidelines—principles imbued with noble ideals of accountability and rectitude. Some of the officials surveyed, like Watson, are governed by policies called Special Travel Authorities, which allow them to book businessclass tickets, among other perks. But these documents point back to the governmentwide Travel Directive, a policy unequivocal in its intent to save tax dollars. “The standard for air travel is economy class,” reads the document, negotiated between Ottawa and the white collar unions representing the bulk of its workers. “The lowest airfares appropriate to particular itineraries shall be sought and bookings shall be made as far in advance as possible.” In other words, though some workers are permitted elite travel, all should be trying for low fares.

Some employees do take the injunction seriously. While Watson was piling up $3,000 trips, Philippe Rabot, the former chair of the RCMP external review committee, bought a $278.42 ticket to fly the very same route to attend a meeting. The contrast raises a host of questions. If a man of Watson’s rank has the right to book such expensive tickets, does that mean he has to? Who is enforcing the travel guidelines? And finally, what kind of message are the big spenders sending their subordinates?

THE RADWANSKI FALLOUT BROUGHT A ‘CULTURAL SHIFT/ SOME SAY. BUT ABUSES CONTINUE.

AM AUDIT SHOWED DEFENCE STAFF WENT TO PLACES LIKE VEGAS, FOR TRAINING AVAILABLE LOCALLY

Johnson Yip was the ideal employee, a loyal, ambitious bureaucrat primed for promotion. By 2004, he was stationed on the Lower Mainland, a top finance official in the Justice Department’s British Columbia headquarters. The bosses considered Yip to be such a standout that they agreed to fork over $30,000 so he could pursue an executive MBA degree. He returned the favour by bilking the public purse out of more than $17,000—doctoring receipts, filing bogus expense forms and charging personal items, including electronic equipment, to his employee credit card. In January 2006, after being fired from his job and pleading guilty to fraud, he received an 18-month conditional sentence that included six months’ house arrest and 75 hours of community service. He would eventually repay every penny he stole.

What is most troubling about Johnson Yip is not what he did, but how easily he was able to do it. Nobody is suggesting government buildings are overrun with criminals. But the government’s own internal probes reveal that, from cabinet on down, the travel and hospitality system is vulnerable to abuse. Numerous departmental audits, including the one that first uncovered Yip’s scam, reveal that midand low-level public servants are often just as careless with federal cash as their political masters. Worse, shoddy paperwork, toothless regulations and lack of oversight have ensured that even well-intentioned public servants squander cash.

• An audit that examined how the Department of National Defence manages its $260-million travel and hospitality budget concluded that better bookkeeping could save the Canadian Forces at least $15 million a year. In several instances, employees trav-

elled to locations, including Banff and Las Vegas, for training sessions that were offered locally. An annual trade show in Orlando was the most popular destination, attracting 90 visitors in 2003/2004 at an approximate cost of $3,000 a head. DND did not need to send so many delegates, auditors said, adding that the Florida getaway was not the only example of overkill. Auditors also found that some travellers chose to “stay over a weekend, ostensibly to reduce flight costs. However, when additional hotel, meal and incidental costs were considered, total travel costs were more expensive—sometimes significantly— than for travellers who returned home immediately following business.”

• Auditors had much tougher words for the Department of Fisheries and Oceans.

“We found several instances of high airfare costs (more than $3,000 for domestic and more than $5,000 for foreign),” auditors wrote in September 2005. “For one region, we identified 15 flights that cost $81,000 more than the lowest available flight as indicated by the travel provider, or an average of $5,400 extra per flight. For many of the 15 flights there was no explanation on file to justify the extra costs.” In two separate cases, public servants travelling overseas purchased small amounts of currency at foreign hotels at an inflated exchange rate, only to turn around and claim all their meals and accommodations at that higher rate. As for hospitality expenses, auditors examined a random sample of 220 claims, discovering that half were either missing proper approval or exceeded the authorized cost. Nearly one-third of the time, the paperwork was so lacking that officials could not even figure out what was purchased.

• The internal auditors who caught up with Johnson Yip discovered other deficiencies in the Department of Justice. In March 2005, after examining 91 hospitality files, they found that 35 per cent contained not a smidgen of proof that the event in question was authorized. In one egregious example, the department paid a $16,000 cancellation fee to Edmonton’s Hotel MacDonald after deciding—without bothering to do a cost/benefit analysis—to call off a planned conference at the last minute. Travel policies were also ignored. Before leaving on a business trip, every bureaucrat is supposed to fill out a travel authority and advance form (TAA), a standard document that outlines who, what, where, when, why and how. Auditors examined 331 such forms, concluding that every

MISSING RECEIPTS, CLAIMS NOT APPROVED, TRIPS THAT LOOK LIKE HOLIDAYS

ONE AUDIT FOUND EVERY SINGLE TRAVEL FORM VIOLATED THE RULES IN SOME WAY

single one failed to comply, in one way or another, with Treasury Board rules. Among the violations, nine employees flew business or executive class when they were not entitled to the privilege.

It is tempting, under the circumstances, to point a finger at free-spending individuals, or the negligent managers. But every federal department seems plagued by the same overriding problem: disorganization. Simply put, government number crunchers lack a clear understanding of where most of the annual travel budget is diverted. They know precisely how much money was spent in fiscal year 2004/2005 ($1.2 billion), how many plane tickets were purchased (284,863) and the total price of those fares ($218 million).

They also know where every employee went.

That same year, for instance, 32,683 civil servants flew one way between Ottawa and Vancouver at an average airfare of $351 (that price is not only reasonable, but it reinforces the contrast of, say, John Watson spending four times that amount on a round-trip ticket to the same location).

But the system clearly doesn’t catch overly expensive tickets, and gives no context in which to assess them. And beyond airfares, where the money goes is anyone’s guess.

Hundreds of millions of dollars’ worth of meals, taxis, hotel rooms and car rentals are filed in

gory one senior official described vaguely as “unknown”—a hodgepodge of expenses stored in countless filing cabinets across dozens of departments. Nowhere are those statistics collected and stored in one coherent, aggregate database, which, in the private sector, is considered

the industry standard. “If someone said, ‘How much did the government spend on private motor vehicle usage in Ontario?’ we would not be able to tell you,” says one Treasury Board official.

The absence of that vital data is emblematic of a much larger, long-standing problem that has quietly cost the public purse untold millions. Without an all-encompassing view of where travel cash goes, the government has been unable to do what many corporations have done for years: slash costs by buying in bulk or bartering side deals with individual suppliers. Civil servants in Heritage Canada might be renting cars from the same

dealer that supplies vehicles to Health Canada, but nobody can say for sure, let alone negotiate a wholesale price.

Reg Alcock, the former Liberal president of the Treasury Board, studied these shortcomings closely during his two-year tenure. He discovered that they date back to at least the 1980s, when the government attempted to apply private sector management theory to its operations, spreading authority further and further down the food chain. “The new mantra was let the managers manage,” he explains. “The idea was to move operating decisions as close to the point of contact with the customer as you can.” But government is not business, Alcock observes, and without the profit motive, there was little incentive for employees to save. There was certainly no appetite for the kind of computer expensetracking common in major companies. Standing in for those safeguards was the noble harrumphing of the Travel Directive, which many departments interpret as optional. “How can this be?” Alcock recalls asking himself. “If Treasury Board is supposed to be holding you to account for this, how can you simply ignore its directive? There has been a real restructuring of power and authority in the government which allowed this to happen.”

The auditor general officially sounded the alarm in 1995, urging the feds to compile all travel-related paperwork into one easy-toread database loaded with electronic checks and balances. “With the emergence of new technology there is a potential to achieve savings by re-engineering activities and simplifying the travel administration process,” auditors wrote. “Until there is better information and better coordination among central agencies and departments, the amount of cost reduction achieved will not be known.” Eleven years later, Ottawa is still working on an answer. But it’s close. In the coming months, the government hopes to finally implement the last few pieces of the Shared Travel Services Initiative (STSI), a long-awaited program that will integrate every step of the travel process, from booking to approval to reimbursement.

It is a costly overhaul. In November 2003, the feds agreed to pay Accenture Inc., a global consulting firm, $275 million over seven years to develop and oversee the program, which includes a travel agency, an online booking tool and corporate credit card services. Government policies—including the Travel Directive—are embedded directly in the system. If a civil servant tries to sidestep the rules and reserve a seat in business class, red flags will fly. Every single questionable expense will have to be approved, in advance, by a supervisor. “There are a number of safety nets,” one official boasts.

THE AMBASSADOR TO FRANCE SPENT $311,800—$7,600 ON ONE PARTY ALONE

ONE MAN, ONE MEETING, ONE ROUND TRIP FLIGHT TO HAWAII: $7,946.93

Portions of the new system are already up and running in some ministries, but the government-wide start date has been postponed more than once. In a report to Parliament tabled last year, the Public Works Department lamented the “significant delays” in the STSI, warning that “further delays could result in departments and agencies wanting to pursue independent travel solutions.” Speaking to Maclean’s, government officials downplay such concerns, insisting that the wait will be well worth it, including an annual savings of more than $100 million over the next nine years. Last fiscal year—even without the full roster of services—the government saved $19.6 million on airfare alone. “Everything you can think of is going to be in this travel expense system,” said one Public Works employee. “We will be able to conduct better negotiations with the suppliers because we will know exactly how much we spent with each one of them.”

While ingly the implementing feds were painstaka hightech remedy, Reg Alcock was hatching another, much simpler solution three years ago: sunshine. Publish expenses in a timely manner, he reasoned, and the Radwanskis would be smoked out before they could buy their next martini. His “proactive disclosure” system would start with the most senior employees, on the grounds that they spent the most, and that they set an example that hopefully their underlings would follow. For a time, it achieved the desired outcome. The year proactive disclosure took effect, government-wide spending on travel fell 6.2 per cent, to $1.19 billion.

But it’s clear it’s not working now. In addition to the many pricey tickets and other expenses revealed in the Maclean’s investi-

gation, overall spending is back up. Moreover, a sample of eight senior employees’ filings done during the 2005 Fisheries audit showed that 38 per cent of hospitality claims were never posted, while a handful of trips were also left off. Maclean’s own research revealed that some employees tacked expenses on after their quarterly deadlines. One problem, says the ethicist Schafer, lies in the dishevelled state of the information, which makes it difficult to monitor for abuse or omission. “Providing masses of data isn’t necessarily providing information,” he says. “If the government really took accountability seriously, they would organize the data and present it in a way that would allow people to make reasonable judgments on what’s happening.”

All of which places the new Conservative government—which has staked its survival to accountability—at a crossroads. Does it correct the glaring flaws of proactive disclosure, introducing legal backstops to ensure it is accurate, comprehensive, and presented in a manner that allows interpretation? Or does it turn its back on the idea and bank on the promise of a state-of-the-art computer booking and tracking system?

For now, it is backing the disclosure horse. In an interview with Maclean’s, Alcock’s Tory successor, John Baird, says he supports the concept and would look at ways to improve it. His language is noncommittal: “If there are suggestions and proposals that will help increase transparency,” he says, “we’re all ears.” But his tone sharpens when he learned employees might already be gaming the system. “I can tell you those departments are going to face greater scrutiny and accountability.” For Baird, it is all part and parcel of “changing the culture of entitlement” in Ottawa, a goal he says could take “weeks, months or even years” to achieve. If nothing else, his attitude represents an improvement over those who figure the culture has changed enough. But if Baird is serious, he is signing up for nothing less than a socio-political megaproject. Joining the dog-pile on George Radwanski is one thing. Taking on a system that would let John Watson commute from Vancouver, and allow others to follow in his high-priced footsteps, is quite another. M

Meg Floyd

For a complete list of top spenders, go to www.macleans.ca.