The Abotech Affair: David Smith appears before the Ethics Commissioner, and is cleared
Liberal MP David Smith, representing the riding of Pontiac, ran a home-based computer consultancy firm called Abotech, now owned and operated by his wife and his two children, both minors. Earlier this year, Abotech had several contracts with the federal contract terminated, though the reasons were never clearly described.
A bureaucrat at Consulting and Audit Canada, Frank Brazeau, was suspended. Why? We don't really know.
Today, the Ethics Commissioner, responding to a letter from Nepean-Carleton MP Pierre Poilievre, release his report on David Smith, and gave him a clean bill of health.
*Yawn*
A month ago, I might have cared. Today I know that the question of what is going on at Abotech is not a question the Ethics Commissioner could answer.
The fact is, had the Ethics Commissioner investigated Chuck Guite, it is doubtful he would discovered any unethical conduct in the Sponsorship Program either. Chuck Guite followed all the rules in the contracts that were signed. He did not direct contracts to companies in which he had an interest, or that were run by his family. The fact that the contracts themselves were bogus and no work was done for the money paid is not a concern of the Ethics Commissioner.
The same goes here. But even accepting the constraints of the Ethics Commissioner's area of interest, his report on David Smith was severely compromised by the lack of any sort of in-depth investigation.
The investigation was also compromised because David Smith neglected to mention a very pertinent fact to the Ethics Commissioner, and he got away with it.
The Ethics Commisioner's report on David Smith is now online.
Boiled down to the essentials, the report clears David Smith on the basis that he no longer owns the company.
That's it.
What about the sole-sourced contracts that were given to Abotech, and then terminated?
Finally, the Ethics Commissioner cannot render findings in relation to the issuance of the sole-source contracts by Consulting and Audit Canada and Abotech Inc. since these events all occurred prior to the Member from Pontiac being elected to the House of Commons and before the Code came into force on October 4, 2004. The Conflict of Interest Code for Members of the House of Commons does not have a retroactive affect.
So the Ethics Commissioner essentially ignores the contracts. We have no confirmation about whether they were aboriginal set-asides, no information about who signed the contracts, no information about how much money was paid, or any information about the nature of the work.
Like I said, if the Ethics Commissioner had investigated the Sponsorship Program office, he would have said everything was fine even as more than a quarter of a billion dollars was being stuffed into envelopes and handed to Liberal Party friends, and then back to Liberal Party hacks.
What about Frank Brazeau?
Frank Brazeau was interviewed by the Ethics Commissioner, and it seems that both David Smith and Frank Brazeau neglected to tell the whole truth:
During this interview, which was recorded and transcribed, Mr. Brazeau confirmed to my Office that he has known Mr. Smith for a very long time, as they grew up in the same town and were almost the same age. This corresponds to statements made by Mr. Smith in his interview with respect to his relationship with Mr. Brazeau. Mr. Brazeau also told us that he had had little contact with Mr. Smith between 1981 and 2000. During this period, any meetings were purely fortuitous.
The professional relationship between Mr. Brazeau and Mr. Smith began around 2001, when Mr. Brazeau was working for CAC. Mr. Smith, who was then President and sole shareholder of Abotech Inc., asked for a meeting with Mr. Brazeau in order to discuss and enquire more about the process to be followed in order to obtain federal government contracts. Mr. Brazeau informed Mr. Smith of the various parameters that needed to be met in order to be considered by CAC.
In terms of Mr. Brazeau's political involvement, Mr. Brazeau told us that he had been approached by Mr. Smith to help him with his nomination and in the 2004 election campaign. Later on, Mr. Brazeau was elected as Secretary of the Liberal Association in the Pontiac riding in mid-December 2004. He had not been very active and resigned in August 2005.
Grew up in the same town? Check.
Almost the same age? Check.
Closely related cousins, by virtue of Smith's mother and Brazeau's grandmother being sisters? Oops, forgot mention that.
And despite my letter to the Ethics Commissioner, the question was not asked during the interview (at least not according to this summary -- I haven't seen the transcript).
Would the direction of the investigation changed if that nugget of information was revealed? The second paragraph describing the "professional relationship" discussing the "process to be followed in order to obtain federal government contracts" sounds a bit different when it's two closely related family members having the discussion.
But as far as the Ethics Commissioner cared to know, Smith and Brazeau were just coincidently from the same town, and later worked on the political campaign together, and then not all that dilligently.
The reason for interviewing Frank Brazeau in the first place?
The purpose of the interview was to obtain information in regards to the various ties which may have existed between Mr. Smith and Mr. Brazeau.
Well, the most interesting tie of all was simply not reported by either David Smith nor Frank Brazeau. Both men seemed to forget to mention that they were cousins. A less charitable interpretation was that there was an agreement beforehand not to offer that piece of information if asked in order to forestall more questions and a deeper look.
The Ethics Commissioner takes a very mechanical view when it comes to ethical behaviour. Does your name appear in the company documents?
No?
Then everything is fine. The report makes no mention of the fact that Abotech is a home-based business. The Ethics Commissioner does reveal that David Smith signed contracts after June 15, 2003. At the time, before he became a member of parliament, he worked at Public Works, and was advised that since Abotech was receiving government contracts from Public Works, he should sell the company.
He did so, but the company continued to be run in his presence.
Moreoever, he signed documents. Smith claims he was coaching his wife, and signed the documents inadvertantly.
How do you sign a document inadvertantly? Actually, the phrase used in the report was that "he had done so in complete unawareness".
Moreover, he was listed as a director until April 28, 2004, when Industry Canada was informed he would cease acting in that capacity. Why was he a director at a company for almost a year after he was supposed to cut ties?
David Smith says he doesn't know why, but thinks the documents were filed at fiscal year end (April 2004) instead of immediately (June 2003).
Unaware that he was still a director and unaware that his was signing documents? If the Ethics Commissioner understood that Abotech was being run out of the kitchen, then he might have thought to consider just how reasonable that excuse sounds.
The bottom line is that despite documentary evidence in possession of the Ethics Commissioner that David Smith was active in the company after he was supposed to cut ties, Bernard Shapiro is all too eager to accept any excuse provided.
Moreover, the Ethics Commissioner was either unaware or uninterested in details about Abotech's business or the nature Frank Brazeau's relationship, details that would require a deeper look into the situation.
Finally, the Ethics Commissioner is either unable or unwilling to study the actual contracts in question.
The report is useless. The conclusions are a joke. And remember, David Smith and Frank Brazeau both declined to fully disclose their "various ties" when they spoke to the Ethics Commissioner, and that bears repeating:
The purpose of the interview was to obtain information in regards to the various ties which may have existed between Mr. Smith and Mr. Brazeau.
During this interview, which was recorded and transcribed, Mr. Brazeau confirmed to my Office that he has known Mr. Smith for a very long time, as they grew up in the same town and were almost the same age. This corresponds to statements made by Mr. Smith in his interview with respect to his relationship with Mr. Brazeau.
No mention of a family relationship by either man. That is not an oversight. That is a conscious decision to omit a fact relevant to the investigation, perhaps in the hope of undermining it.
That in itself is unethical behaviour.
And yet I am not surprised that Bernard Shapiro could not spot an unethical act being performed right in front of him.
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Comments
the EC is a eunuch--he has been neutered by the Liberals--what else could we expect from him? Anyone with a modicum of intellect could see this is a setup right before the election. But then--ethics for a Liberal are so much different than for the rest of us. Try not reporting your income honestly--RC would be after you in a heartbeat. But Liberals are above the law--and the EC is nothing if not a Liberal toady. Liberals control every institution that was in place to protect the citizen from the government--democracy indeed
Posted by: George at December 23, 2005 12:58 PM
The Lie-beral appointed Ethics Commissioner's sum total of work has been a patent waste of time and taxpayer's money.
Posted by: Bruce Randall at December 23, 2005 01:29 PM
So, George
I absolutely agree with you about the liberals "owning" every institution that was put in place to offer any sort of check on power. The only thing that ever came out of PM's mouth that I found believable was when he said, "I won't let you take my country from me". To most Canadians, the term "my country" means one thing. I believe to PM, it means something else
Posted by: Rob R at December 23, 2005 01:38 PM
Are we the ones who are out to lunch?
Is the ethics commissioner unethical?
If so who looks into him?
I really hope the liberals come knocking on my door
Posted by: ian murray at December 23, 2005 01:58 PM
You say:
"So the Ethics Commissioner essentially ignores the contracts. We have no confirmation about whether they were aboriginal set-asides, no information about who signed the contracts, no information about how much money was paid, or any information about the nature of the work."
I won't comment on the EC, but, all of the contract information is available through access to information. I'm surprised you jump to all these conclusions when you don't have the info that you could obtain for $5.
Here's a shortcut that one of your crazy "reporters" can follow up on: none of the contracts were set aside. Brazeau did not sign any of the contracts. The statements of work, and who actually did sign, is all available my friend.
Now, on the subject of who's related to whom.... yawn...... Have you thought about this? How many contracts in government are awarded to the neighbours of contracting officers? Or buddies from the weekly hockey team? Or friends from the local church? Hm? Or, in the case of CAC, how many contracts were given to spouses and friends of CAC colleagues? I would think that that is a more serious, though less public, issue. And let's not forget the fact that Brazeau has been suspended for 14 months. Why? He signed none of these contracts. Not one. How can he be held responsible for something that was not part of his job?
It comes back to this: the leadership at CAC completely mismanaged that entire agency. Rather than admit that gross mismanagement was the norm and that all kinds of poor practices were undertaken, the PWGSC big boys decided to make Brazeau the scapegoat, swirl it into the David SMith thing (he was cleared again), and bury the two directors general who really screwed up the place, namely McCann and Vadeboncouer.
I really wish you guys would start using access to information on this stuff before you jump to all these conclusions.
Posted by: at December 23, 2005 02:19 PM
"I won't comment on the EC, but, all of the contract information is available through access to information. I'm surprised you jump to all these conclusions when you don't have the info that you could obtain for $5."
Who says we're not working on this angle too?
The point I'm making is that the Ethics Commissioner chose to ignore a critical element of the case, arguing that his mandate is constrained by the letter of the law.
But when presented other "letters", ie, contracts signed after Smith was supposed to cease being a director, and an Industry Canada filing showing he was still officially a director, suddenly the Ethics Commissioner waves it away and applies his own judgment on what is credible and relevant and what can be ignored.
"It comes back to this: the leadership at CAC completely mismanaged that entire agency. Rather than admit that gross mismanagement was the norm and that all kinds of poor practices were undertaken, the PWGSC big boys decided to make Brazeau the scapegoat, swirl it into the David SMith thing (he was cleared again), and bury the two directors general who really screwed up the place, namely McCann and Vadeboncouer."
Working on it...
But regardless of CACs problems, the fact remains that Abotech received lots of money to do nothing except deliver contracts to other people. Smith admits it himself, arguing that the work was so simple, it was easy for his wife to take over. But the work was trivial, why did it cost so much and why didn't someone just decide to skip it?
That part of the story stands, and since the EC decided he couldn't be bothered to look at the contracts, he drew no conclusion.
Posted by: Angry in T.O. at December 23, 2005 02:28 PM
Smells like son of adscam to me
Posted by: George at December 23, 2005 03:09 PM
Glad you're working on it, Angry.
Seems to me that Abotech is much like any other "body shop" outfit in that it takes a percentage of whoever ends up doing the work. This is not peculiar at all in government contracting for professional services, especially in the IT field where teams with various expertise are pulled together, subcontractors, sub-subcontractors etc. I think you'll find through ATIP that this was the case. Also, bear in mind that what a contract is valued at is not the same as what was actually spent. These were all "fee for service" contracts. No work needed by the client = no money paid to either the supplier or Abotech. THat's why those two contracts were terminated: the client department didn't need the services so there was no work to do. Not, contrary to what Brison would have us believe, there was any kind of wrong-doing going on (he's covering up for his liberal cronies in pwgsc).
Angry, were you also aware that the PWGSC auditors were "harassing" other CAC employees recently? Word is up to 20 official harassment complaints were launched by CAC employees with their union. Well, I bet the auditors are all over the rest of them! They're the ones who did contract splitting, endless sole source after sole source to the same supplier for the same work in order to avoid competitive processes. I could go on. Maybe I'll write a book someday. My real concern here is that Brazeau is being unduly punished for work he did with management's full support and blessing. He signed no contracts on behalf of the government. Even Gomery will tell you that the one with the signing authority is the one who must be held responsible and accountable. Why is that not happening here? Why does PWGSC continue to bury this $1.4M report? (actually, I know why: their facts were wrong and they didn't find anything material....yet even more reason for Marshall to keep it hidden so we can't complain about the collosal waste of taxpayers money on a witch hunt).
Posted by: at December 23, 2005 03:13 PM
When you're doing your research, you may also wish to ask what percentage of professional fees did Abotech charge. Then you also need to ask how much $$ of these contracts were actually used (again, not the total value, only that which was actually spent). I think you'll find that Abotech didn't make very much at all. Perhaps your research will confirm that through access to information.
Posted by: at December 23, 2005 03:24 PM
Having read your articles, I'm a bit short on one point probably since I'm unable to get the timelines straight in my mind.
Was Mr. Smith at any time a civil servant (full-time or contracted) during which interval Abotech did any business with the government?
Although suspicions about MP-overlap may continue in some minds, I think that the Ethics Commissioner's opinion has taken the issues (he considered) out of the public spotlight.
Just wondering.
Posted by: Erik Sorenson at December 23, 2005 04:21 PM
Christmas wish at Duke's Place
http://tinyurl.com/7bdty
Posted by: Duke at December 23, 2005 11:53 PM
Not on the subject and probably politically incorrect.
Angry, I often disagree with you but you make me think. I thank you for that because intelligent thought is something that can initiate change.
Merry Christmas, Joyeaux Noel, Bonnes Fetes, etc. (This is the politically incorrect part because I have probably offended a non-Christian who has immigrated to a country where [I believe this to be true] the majority or at least a significant proportion of the population are Christian.) Nonetheless I take pride in offering my best wishes for everyone during this season.
Best of the season to everyone.
Cheers
Gerry
Posted by: gerryinmontreal at December 24, 2005 12:40 AM
Oh..Oh...Seems like Brazeau will have a case against PWGSC, NO THANKS TO YOU ANGRY. Stop making this NON-STORY so personal an start woorying about Lawrence Cannon's double dipping in the STO funds in Gatineau. $12000 in a few months??? What the hell is going on there???
Posted by: at December 24, 2005 04:29 PM
How do you know Smith and Brazeau lied? Talked to both on Christmas and they told both CAC and the Ethics Counsellor that they were related. Shows that the issue is not about Smith and Brazeau, but.....what? Brazeau is also back at work following the new year but not at CAC/PWGSC.
Posted by: Socialist at December 27, 2005 04:16 PM
I bet you never seen this:
DEAN BEEBY Canadian Press OTTAWA A federal watchdog that's supposed to
ensure the government follows the rules when it signs contracts for
goods and services has been breaking those rules.
The latest improprieties are outlined in a newly released report into
how Consulting and Audit Canada -- the auditing service run by Public
Works -- tendered its contracts.
The May review, obtained under the Access to Information Act, was
carried out in part by a private consulting firm, Public Sector Co.
Ltd., to ensure an independent assessment.
It examined 112 cases in which officials suspected Consulting and Audit
Canada of deliberately splitting a large contract into smaller pieces to
avoid rules that require competitive bidding when the value is above a
certain threshold, normally $25,000.
This practice, known simply as contract-splitting, is forbidden by the
Treasury Board because it is often used unfairly to favour a particular
firm.
Splitting can also be expensive; without competitive bidding, contract
costs can soar. The review found evidence of contract-splitting in half
of the files studied.
"In five different cases involving some 15 contracts, the appearance of
contract-splitting is strong," the report says.
"All five cases involve a sequence of contracts for a value of just
under $25,000 for similar services, awarded on a non-competitive basis."
It stopped short of accusing officials of deliberate manipulation.
"A definitive finding of contract-splitting would be unusual since it
would require an understanding of the motives of the contracting
officials involved, and officials are unlikely to record on the file
that a threshold was being avoided," the document says.
Even so, the report's conclusions are embarrassing for an agency whose
objective is to "ensure sound procurement processes" in the federal
government, according to a recent Public Works report to Parliament.
The 391 staff of Consulting and Audit Canada conduct about $122-million
worth of auditing and other services each year for federal departments
and agencies.
The organization also signs approximately 1,400 contracts for services
annually.
About 60 per cent are worth less than $25,000 each.
The review -- which included 102 additional contracts examined by the
agency's auditors -- found numerous other problems, including date
inconsistencies, inadequate bid evaluation reports, lack of
security-clearance paperwork and biased tendering.
"The team consistently encountered incomplete, insufficient, or
misplaced documentation," the study concludes.
Public Works rejected an Access to Information request in March for a
draft version of the review, but provided a final version after an
investigation by the Information Commissioner of Canada.
Consulting and Audit Canada says it has taken steps to resolve the
"serious deficiencies" uncovered by the investigation.
"We've already taken measures to improve document management," Andre
Auger, chief audit executive, said in an interview. "We've also taken
measures to revive procurement training." No disciplinary action has
been taken against any employees, he said. However, procurement problems
were raised "where warranted" during individual performance assessments.
Mr. Auger also said the government has cleaned up its act since 2000,
having established a central procurement arm within Public Works that
handles contracts more professionally and with higher standards.
Public Sector Co. Ltd. was paid about $70,000 for its review of the 112
files.
Posted by: Socialist at December 27, 2005 04:23 PM
So do we know how many contracts Smith & Co got and what dollar value they scammed.... I mean earned?
Posted by: Mac at December 28, 2005 11:32 PM
 
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