Industry Canada, the DFO and the CSA

November 14th, 2013

On Nov. 13th, 2013, RestoreCSA / PSKnight sent a letter to Fisheries and Oceans Canada requesting that they initiate an investigation of Ms France Pegeot, Senior Assistant Deputy Minister, DFO.  The letter has been copied to the relevant Members of Parliamentary Committees.  The text of the letter is enclosed below.

Nov. 26th UPDATE:  Ms Pegeot to be Embedded with the Department of Justice


[addressed to the Sr. Officer for Disclosure, DFO]


Re: Fisheries and Oceans Values and Ethics Code
Potential Violations and Request for Investigation


I am writing to draw your attention to potential material breaches of the Fisheries and Oceans Values and Ethics Code (the Code) by Ms France Pegeot, Senior Assistant Deputy Minister, Fisheries and Oceans Canada (DFO).

Ms Pegeot has been a Member of the Board of Directors of the Canadian Standards Association (CSA) since 2007 with her DFO executive role publicly noted by CSA.  Ms Pegeot has served the Federal Government in a variety of roles within Industry Canada, including the National Research Council, prior to her appointment to the DFO.

The CSA was created by an Act of Parliament and is mandated by Federal Charter as a Federal regulator reporting to the Minister of Industry through the Standards Council of Canada (SCC).  The status and reporting relationships of the CSA have historically been ambiguous.  During 2012, P.S. Knight Co. Ltd. sought verifications that the CSA is indeed a federal regulatory entity reporting to the Minister of Industry and has received these verifications from Industry Canada, Industry Canada’s Competition Bureau, the office of the President of the Treasury Board, the RCMP Commercial Crimes Unit, the Library of Parliament, and from a number of MPs and Cabinet Ministers.

The CSA is presently facing scrutiny by both federal and provincial governments for activities that appear at variance with policies and standards applicable to federal regulators.  Certain CSA activities may be criminal in nature.  The activities under scrutiny were approved by the CSA’s Board of Directors, of whom Ms Pegeot was a Member during the period in question.

Conflicts of interest in governance may be alleviated by the conflicted director’s disclosure of her competing interest and her subsequent abstention from voting on matters related to that conflict.  Given that the CSA reports to the same Department in which Ms Pegeot was an executive, and given that the CSA’s mandated activities are entirely within the purview of that Department, compliance with the conflict of interest requirements of Federal fiduciary law would require abstention from nearly all of the votes of the CSA Board. 

A director may be held personally liable for any decisions or influences that are illegal (including breach of fiduciary or statutory duties), or permits the corporation to act outside of its authority, or for any torts they commit individually or on behalf of the corporation.

We enclose the Parliamentary Briefing of October 4th, 2013 that summarizes the questionable CSA activities. 

Certain of the conduct in question also appears to violate multiple sections of the DFO Code. 


Conflicts of Interest

As a federal regulatory entity, the CSA reports to the same Government than employs Ms Pegeot.  Specifically, the CSA reports to the Minister of Industry at Industry Canada through the SCC. 

Ms Pegeot was Assistant Deputy Minister at Industry Canada during the same period that she was a Board member for CSA, an entity that reported to her Industry Canada office.

The CSA lobbied Industry Canada during 2012 for “additional limited protections from civil proceedings.”  Over several years, the CSA has received from Industry Canada a series of immunities from litigation.  Ms Pegeot, in her senior roles in Industry Canada, may or may not have influenced the proceedings in favour of her other interests at CSA, though any protection from legal accountability afforded by her Department to CSA would necessarily have benefitted her also.

The CSA routinely lobbies the federal Government for funding for various activities external to its original Charter.  The CSA received $5,623,998.30 from the Canadian governments during 2011.  This sum is in addition to CSA’s revenues afforded by governments from sales of access to legal statutes, sales of influence at legislative committees, sales of certification marks, etc.  Permitting a senior executive of the Federal Government to hold a Board Membership in a regulatory entity receiving many millions of dollars every year in Federal Government funding is, at best, the appearance of “using their official roles to inappropriately obtain advantage” [Code, Part 1, Section A, Article 3].

The CSA has been afforded by Industry Canada de-facto powers of taxation over construction and engineering activity in Canada.  In sales of electrical law, the CSA generates an estimated $7MM per year in compulsory payments.  The CSA generates over $9MM per year from corporations in sales of influence over legislative committees.  The CSA is also targeting contractors for taxes on the display of jobsite safety information (i.e.: the transfer of “royalties” from contractors to CSA in payment for the right to view public safety regulations that CSA claims to “own”).  These highly questionable, ongoing CSA practices, approved by the CSA Board during Ms Pegeot’s tenure, have been permitted by the leadership of the same Department in which Ms Pegeot served as a senior leader.

In 2009, Industry Canada appointed Mr. Ash Sahi as Chief Executive Officer of CSA.  In 2009, Ms Pegeot was Vice President, Policy & Planning at the Canada Economic Development, Regions of Quebec agency, itself an autonomously run subset of Industry Canada.  It should further be noted that Mr. Sahi is the former Director, Industry and Trade, at Industry Canada.  Additionally, Mr. Sahi was the Special Advisor to the Privy Council of Canada.

Also in 2009, Industry Canada appointed Mr. John Walter as Chief Executive Officer of the SCC, the federal body responsible for policing the CSA.  Mr. Walter is the former Vice President, Standards Development at the CSA. 

These activities have the appearance of an inside game. 


Reference to the Code

We note that the Code makes repeated reference to high standards of ethical conduct, that DFO leadership should act “at all times with integrity, and in a manner that will bear the closest public scrutiny, an obligation that may not be fully satisfied by simply acting within the law,” and that “supervisor and managers lead by example and set the tone for ethical conduct.  Actions speak louder than any written code.”

Certain CSA conduct is being scrutinized for potential violations of the Criminal Code.  In this context, we note that the DFO Code precludes conduct that “renders us guilty of a serious breach of the Criminal Code of Canada and thus renders our conduct injurious to the general reputation of the Department and its employees.”


Request for Investigation

In the context of the above noted concerns, and in the further context of the issues outlined in the Parliamentary Briefing Notes as correlated to the DFO Code, we hereby formally request that the DFO immediately initiate an investigation of potential material breaches of the DFO Code by Ms Pegeot.

We are unclear on protocol for such investigations, but it seems proper that Ms Pegeot’s employment should, in the least, be suspended with pay pending the results of investigation. 


Regards,

Gordon Knight,
President and CEO,
P. S. Knight Co. Ltd. 

/gk