Jane Stewart Scandal

No one ever suggested Mel Cappe was much of a micromanager. Cappe's reputation in Ottawa's public service is as a big-picture guy, a bureaucrat more interested in the sweep of policy-making than the dotted i's of program management.

Jane Stewart Scandal

No one ever suggested Mel Cappe was much of a micromanager. Cappe's reputation in Ottawa's public service is as a big-picture guy, a bureaucrat more interested in the sweep of policy-making than the dotted i's of program management. He made his mark on high-profile political files, notably Ottawa's decision, after the close call of the 1995 Quebec referendum, to transfer manpower training responsibilities from the federal human resources department to the provinces. Cappe was the department's deputy minister at the time and he helped cut a deal the Liberal government wanted done and much of the Ottawa bureaucracy resented. It was a performance Prime Minister Jean Chrétien remembered last year when, looking for a new clerk of the Privy Council, he plucked Cappe from Human Resources to make him the top civil servant in the land.

Cappe must wonder these days why he didn't pay more attention to the nitty-gritty in his old job. A bureaucrat accustomed to the anonymity of Ottawa's policy salons, Cappe now finds himself in the eye of a political scandal that has the Liberal government under the harshest attack of its second term - and shows no sign of abating. It stems from an internal audit of job-creation programs in the human resources department during Cappe's time at the helm, and the results aren't pretty: as much as $3 billion of taxpayers' money doled out with little regard to how it was spent. "Deputy ministers can't focus on every program going on in their departments, but they've got to keep their eyes on the big ones and the politically sensitive ones," said one former deputy minister. "And even by government standards, this was a lot of money."

So there were loud cries for Cappe's head last week - Reform MP Maurice Vellacott suggesting he be "drop-kicked right out of his role as top bureaucrat." Opposition politicians love the way the words "billion-dollar scandal" roll off their tongues, and for the first time smell serious fear in the Liberal ranks. They demanded resignations from current Human Resources Minister Jane Stewart, as well as from Pierre Pettigrew, who held the post when the money was passed out. Stewart showed no sign of being able to calm the roiling waters. Her original tack was to try to take credit for releasing the audit's findings herself, while vowing to clean up the accounting mess. The storm barely paused. Last week, she tried again, issuing a statement insisting that "money is not missing," and arguing "the audit did not indicate any political interference" in how it was handed out.

No one will ever know for sure, however, because the paperwork to show where money went does not exist. The audit is an appalling indictment of bureaucratic laxity and cavalier political attitudes towards taxpayers' money. Completed last October, but not released until Jan. 19, it showed that, of 459 projects reviewed, two-thirds were never analyzed for their suitability, nor were reasons stated for their approval. Eighty-seven per cent showed no sign of ever being monitored for how money was spent. Another 15 per cent of the projects got money without even applying for it. And the list of job-creation projects is a public relations nightmare for the government: enough golf courses and pizza parlours, yoga therapy groups and taverns to confirm the cynics' belief that Ottawa is casually tossing taxpayers' money to the wind.

The worst may not be over. The auditors said they had found serious enough discrepancies and problems in 37 cases to continue investigating. With Parliament resuming on Feb. 7, the opposition is sure to make government waste the cornerstone of its daily attacks. The Reform party's Diane Ablonczy gave a hint last week of how the details of the audit can continue to fuel outrage. She released a 67-page list of grants made in Stewart's Brant, Ont., riding over the past three years - an average of $10 million a year. Some were dispensed as relatively small change, though necessity did not seem to be a criterion if the $2,718 awarded to the Bank of Montreal is any indication. More substantively, over $7 million went out as grants or subsidies to institutions or businesses "unknown." And dozens of ridings have similar lists available to the opposition.

Coming on the heels of a horribly handled attempt to bail out Canada's NHL teams, the Liberals may have to rethink their enthusiasm for revving up the government spending machine. "There has been a sea change in attitudes towards spending out there," says Walter Robinson of the Canadian Taxpayers Federation. "We're now getting calls from people who say: 'Hey, my town council wants to spend money putting up a statue. How do I stop it?' " And the billions spent in Human Resources have helped make "job creation" a euphemism for old-fashioned pork-barrelling.

Some senior public servants say they always knew human resources programs, such as the Transitional Jobs Fund announced ahead of the 1997 general election, were more about politics than solving long-term unemployment. "When it was announced a lot of us said, 'Here we go again,' " recalled one senior civil servant last week. "A lot of people in Ottawa thought we were finished with that kind of politics." Still, there was some surprise in government towers that so much money could be spent without the congenitally cautious bureaucracy ensuring their backs were covered with the proper paperwork. "The political pressure to get the money out must have been enormous," said one official.

Liberals in Ottawa were showing none of their usual worry-free flippancy last week. "The only way to lance this boil is to throw someone overboard fast," said one longtime Liberal backroom strategist. But there were no obvious fall guys. Chrétien is loath to fire his ministers, having always stuck by those in trouble (such as former solicitor general Andy Scott) long after it became expedient to dump them. And Stewart, the daughter of former Ontario Liberal leader Robert Nixon, is one of the PM's personal favourites, a woman he has known since she was a young girl and whose career he has carefully fostered.

Nor is Pettigrew likely to be cut adrift. His role as international trade minister makes him a key cog in Chrétien's wider national unity strategy - a next-generation Quebec federalist who proves Ottawa's determination to look out for the province's interests in an era of globalization. Pettigrew, who was travelling in Europe last week, said he had not been aware of the audit's findings until the night before Stewart released them to the media, and promised to comment on his return. Cappe, meanwhile, indicated he would appear before a House of Commons committee to answer questions, if asked.

Stewart has already vowed there will be "no witch-hunt" in the bureaucracy. All she would concede was that the department's accounting procedures were "in the Dark Ages." And she showed a certain chutzpah by going ahead with the launch of her department's $120-million student summer jobs action program last week, a sign of either steely confidence or supreme arrogance. The combination of the miscalculated NHL bailout followed by news of the mismanaged billions has left Canadians more sensitive than ever to how government treats their money. Canadians may not want scapegoats. But they may demand that those to blame for squandering their tax money are called to account - if the real culprits can be found in a case with no paper trail.

Maclean's February 7, 2000