i

Corporate Governance in Canadian Federal Crown Corporations: An Analysis of

the Implementation of 31 Measures Announced by the Government in 2005

By

Kelly Cooper

University of Prince Edward Island

A Thesis Submitted to the University of Prince Edward Island, Charlottetown, P.E.I. in Partial Fulfillment of the Requirements for the Masters in Business Administration

February, 2012, Charlottetown, P.E.I.

©Kelly Cooper

Advisor: Gary Evans Associate Professor

Second Reader: Don Wagner Associate Professor

PERMISSION TO USE SIGNATURE PROJECT REPORT

Title of Signature Project: Corporate Governance in Canadian Federal Crown Corporations: An Analysis of the Implementation of 31 Measures Announced by the Government in 2005

Name of Author: Kelly Cooper

Department: School of Business

Degree: Master of Business Administration Year: 2012

Name of Supervisor(s): Gary Evans

In presenting this signature project report in partial fulfilment of the requirements for a Master of Business Administration degree from the University of Prince Edward Island, the author has agreed that the Robertson Library, University of Prince Edward Island, may make this signature project freely available for inspection and gives permission to add an electronic version of the signature project to the Digital Repository at the University of Prince Edward Island. Moreover the author further agrees that permission for extensive copying of this signature project report for scholarly purposes may be granted by the professor qt"rtqhguuqtu"yjq"uwrgtxkugf"vjg"cwvjqtÓu project work, or, in their absence, by the Dean of the School of Business. It is understood that any copying or publication or use of this signature project report or parts thereof for financial gain shcnn"pqv"dg"cnnqygf"ykvjqwv"vjg"cwvjqtÓu written permission. It is also understood that due recognition shall be given to the author and to the University of Prince Edward Island in any scholarly use which may dg"ocfg"qh"cp{"ocvgtkcn"kp"vjg"cwvjqtÓu report.

Address: UPEI School of Business 550 University Avenue Charlottetown, PE C1A 4P3 - ii -

Abstract

Corporate Governance in Canadian Federal Crown Corporations: An analysis of the

implementation of 31 Measures announced by the Government in 2005

By: Kelly Cooper

The corporate governance of Crown Corporations first became a topic of common discussion in 2003 with the Sponsorship scandal whereby Government institutions were implicated in failing to respect the parliamentary appropriations process and in failing to comply with Government contracting policies and regulations leading to a misuse of public funds. As a result, in 2005 the Government announced thirty-one measures Crown Corporations were required to implement to improve their governance and alleviate citizens concerns. This paper is a comprehensive analysis of the implementation of these thirty-one measures in all forty-six Federal Crown Corporations. Since the definitions of some of the measures the Government announced are unclear, rendering their measurement problematical, this paper both defines and clarifies the definitions of the thirty-one measures. Given that these measures were announced five years prior to this study, it could reasonably be expected that all Crown Corporations would by now have implemented all of them and felt obliged to report on their implementation. This paper demonstrates that this is not the case. There is a wide range of disparity on the number of measures implemented, ranging from one Crown Corporation implementing all of the measures to two Crown Corporations implementing only three of them.

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Acknowledgements

I would like to thank my advisor, Gary Evans, and my employer, The Department of Veterans Affairs, for their support.

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Table of Contents

Abstract...... ii!

Acknowledgements...... iii!

List of Tables ...... vi!

List of Figures...... vii!

CHAPTER 1: INTRODUCTION...... 1!

Background ...... 1!

Research Overview ...... 3!

Organization of This Thesis...... 4!

CHAPTER 2: LITERATURE REVIEW...... 5!

Background ...... 5!

Gaps and Future Research ...... 11!

Summary...... 12!

CHAPTER 3: METHODOLOGY ...... 14!

Analysis Framework ...... 15!

Research Summary ...... 23!

CHAPTER 4: FINDINGS...... 25!

Method ...... 25!

Findings...... 27!

Results...... 44!

CHAPTER 5: DISCUSSION AND CONCLUSION ...... 58!

Research Implications...... 60!

Limitations and Future Research ...... 60! - v -

Conclusions...... 61!

Appendix A: Data Reference Material...... 63!

Appendix B: Website Copyright or Intellectual Property Permissions...... 71!

Appendix C: Measures Data Dictionary ...... 74!

References...... 82!

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List of Tables

Table 1. List of 46 Crown Corporations 16

Table 2. Seven Themes for 31 Measures 18

Table 3. Measures Requiring Legislation Change 21

Table 4. Measures Requiring Government Implementation That Could Not Be Verified 25

Table 5. Measures Requiring Government Implementation That Could Be Verified 27

Table 6. Data on Legislative Amendments 30

Table 7. Data on 8 Crown Corporation Measures for Accountability, Independence and Effectiveness 37

Table 8. Data on 8 Crown Corporation Measures for Audit Committee, Appointment Process and Transparency 40

Table 9. Crown Corporations Not Subject to Government Appropriations 50

Table 10. Diversity and Remuneration Information Gathered on Crown Corporation 53

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List of Figures

Figure 1. Number of Legislative Changes Implemented by Crown Corporations 34

Figure 2. Percentage of Crown Corporations Implementing the Legislative Change 35

Figure 3. Legislative Changes - Percentage of Crown Corporations Reporting As Having Met the Requirement 36

Figure 4. Number of 21 Measures Implemented by Number of Crown Corporations 44

Figure 5. Accountability - Number and Percentage of Crown Corporations Reporting As Having Met the Requirement 45

Figure 6. Independence - Number and Percentage of Crown Corporations Reporting As Having Met the Requirement 46

Figure 7. Board Member Effectiveness - Percentage of Crown Corporations Reporting As Having Met the Requirement 47

Figure 8. Audit Committee Effectiveness - Number and Percentage of Crown Corporations Reporting As Having Met the Requirement 48

Figure 9. Appointment Process - Number and Percentage of Crown Corporations Reporting As Having Met the Requirement 49

Figure 10. Transparency - Number and Percentage of Crown Corporations Reporting As having Met the Requirement 51

1

CHAPTER 1: INTRODUCTION

Background

Like publically traded companies, Federal Crown Corporations are distinct legal entities. However, unlike publically traded companies, Crown Corporations are wholly owned by the Government. Crown Corporations have been created to deliver important public programs, with more autonomy than other Government entities, so that they can operate in a more commercial environment, generating revenue and exposed to potential financial losses and risks. In Canada there are forty-six Crown Corporations ranging in size from less than five to 45,000 employees and operating in many sectors of the economy including the financial sector, culture, transportation, agriculture and fisheries, energy and resources, and government services (Auditor General of Canada, 2005). As legal entities, Crown Corporations are created through specific enabling legislation and statutes. The governance and accountability framework for Crown Corporations was established in 1984 in part Ten of the Financial Administration Act (FAA). Since then, the Government has issued new and expanded policy guidelines to reform corporate governance of Crown Corporations following recommendations from the Auditor

General (AG) and various parliamentary committees (Gray, 2006). Up to 2005, a recurrent theme in the AG audits on the governance of Crown Corporation is the lack of progress demonstrated in implementing these recommended governance reforms.

This situation came to a head in 2004 with the discovery of broad corruption in a program of the Federal Government in Quebec called the Sponsorship Program. The program’s purpose was to raise awareness of the Government’s contribution to Quebec’s industries, and ran from 1996 to 2004. It ended in 2004 when illicit and illegal activities

- 2 - in the way the program was administered were revealed. Six Crown Corporations, including VIA Rail and Canada Post were implicated.

In 2003, the AG reported on the Sponsorship program confirming that in addition to Government departments, several Crown Corporations had failed to respect the parliamentary appropriations process and had failed to comply with Government contracting policies and regulations (Auditor General of Canada, 2003). Ten Crown

Corporations were investigated and six were found to have been involved in the inappropriate use and transfer of Government monies in the administration of this program. In response to the AG’s ongoing criticisms of these activities, and in light of the Sponsorship scandal culminating in the Gomery Commission report of 2004, which addressed issues of accountability of public servants, the Government undertook a review of corporate governance in all Crown Corporations. In 2005, the Government issued its paper Review of the Governance Framework for Canada’s Crown Corporations:

Meeting the Expectations of Canadians wherein it identified eleven measures it would implement and twenty measures that it would require the Crown Corporations to implement, thirty-one measures in total, to strengthen the governance of Crown

Corporations (Treasury Board of Canada Secretariat, 2005). According to the

Government, these thirty-one measures were drawn from best practices in governance, including private sector practices where they are applicable to the public sector (Treasury

Board of Canada Secretariat, 2005).

Prior to 2005, Crown Corporations had the option of hiring private auditors to audit their financial statements and perform special examinations for submission to the

Government. Since the announcement of the thirty-one measures in 2005, the Financial - 3 -

Administration Act has been amended to ensure that the Auditor General is the official sole or joint auditor of all Crown Corporations’ financial statements and regularly conducts special examinations of all Crown Corporations. These special examination audits of Crown Corporations completed by the Auditor General since 2005 clearly show that the governance practices of many Crown Corporations have improved. However, there has never been a comprehensive review of all Federal Crown Corporations to ascertain whether or not they have complied with the thirty-one measures specified by the

Government in 2005. This study is intended to fill this gap.

Research Overview

This study is designed to examine the corporate governance structures of all

Canadian Federal Crown Corporations and indentify the implementation of the thirty-one measures announced by the Government in 2005. This examination is limited to the publically available information on Federal Crown Corporations and Government departments, including enabling legislation, annual reports, and Auditor General Special

Examinations. Provincial Crown Corporations are not included in the Government measures announced in 2005 and are therefore also not included in this paper. Although the Government states that the measures to be implemented represent best practices in corporate governance, this paper does not attempt to evaluate the effectiveness of these measures but rather addresses the question of whether they have in fact been implemented. - 4 -

Organization of This Thesis

Chapter two explores the current theories regarding corporate governance generally and develops seven thematic groupings for the thirty-one government measures, such as accountability and transparency, related to theories of good corporate governance.

Chapter three focuses on the methods used for the capture and analysis of the data. Content analysis methods were used to analyze the text of the published governance structures in Crown Corporations for evidence of the implementation of the thirty-one measures.

Chapter four explores the degree of compliance of the Government and the Crown

Corporations with the thirty-one announced measures. This chapter also documents the results based on the seven themes established for this study. Additional information and data on the governance structures of Crown Corporations that are outside the scope of the

Government measures but are of interest in current academic research is also included.

Chapter five discusses the implications of the results of the analysis covered in chapter four and identifies areas of future research that can be undertaken in light of the findings of this study. - 5 -

CHAPTER 2: LITERATURE REVIEW

Background

Corporate governance can be defined most simply by using Cadbury’s definition of “a system by which companies are directed and controlled” (Cadbury, 1992). The

Agency theory of governance focuses on the separation of ownership and control (Pfeffer

1972), since owners or principles of corporations hire executives to manage the day-to- day operations of their corporation. In private corporations, the owners or principles are the shareholder; in the case of Crown Corporations, the Government holds ownership.

The central problem of corporate governance in agency theory is how shareholders or principles ensure that self-seeking executives act in the interest of the shareholder rather than in their own interests (Hendry, 2005). Independent Boards of Directors are the means by which corporations ensure the desired behaviors of agents or executives

(Chatterjee, 2011). The Board of Directors exercises their control of the executives of the corporation through setting strategic direction and objectives and monitoring outcomes

(Chatterjee, 2011). The effective functioning of The Board of Directors is therefore essential to the good governance of corporations.

A number of key studies on corporate governance have led to the established best practices in corporate governance in the United Kingdom (UK), the Unites States (US) and Canada. These studies have in turn led to the establishment of codes of practice, policies and guidelines for corporations which are recommended or required by regulating bodies such as stock exchanges, securities agencies and Government agencies. - 6 -

The UK Cadbury report of 1992 focused on Board structure and recommended practices in relation to the agency theory of governance (Cadbury, 1992). The Higgs review in

2003 emphasized the conditions and behavior necessary for Board effectiveness (Pye &

Pettigrew, 2005) and led to the revision of the Combined Code in the UK. In Canada, the

Dey Report of 1994, a landmark study on the corporate governance requirements in

Canadian boardrooms, recommended governance guidelines to corporations in line with those suggested by Cadbury (Corbin, 1989). The Toronto Stock Exchange Report – 5

Years to the Dey - highlighted the lack of progress in implementing governance guidelines in Canada (Corbin, 1999) and the Auditor General Reports of 2000, 2003 and

2004 led to the Government’s report on the Review of the Governance Framework for

Canada’s Crown Corporations containing thirty-one measures the Government intended to put into place to improve the governance of its Crown Corporations (Treasury Board of Canada Secretariat, 2005).

The Cadbury Report, Higgs Report, Corbin Report and the Treasury Board

Secretariat Report all state the requirements for “good governance” and recommend practices for ensuring “good governance” in both private and public corporations.

Various studies have been done to define the elements of “good” corporate governance, the requirements of Board structure and behavior and to evaluate the effectiveness of governance practices. Without commenting on the effectiveness of the measures the

Government intended to implement, the following section explores the theories behind them and their relationship to corporate governance guidelines and practices. These will be discussed under the headings of seven themes which have been identified by the researcher. - 7 -

Accountability

The Government states that good governance requires transparency and accountability (Treasury Board of Canada Secretariat, 2005). To be accountable, Board directors must have clearly defined roles and responsibilities. Cornforth’s study on the effectiveness of Boards shows that the most important process variable correlating to

Board effectiveness is if the Board has a clear understanding of its roles and responsibilities (Cornforth, 2001). Huse suggests that creating accountability is about aligning actual Board tasks to role expectations (Huse, 2005). In order to accomplish this, the first step is to clearly identify the Board role expectations. Without clearly defined roles, Board members cannot effectively exercise their accountability requirements. Of the 31 measures, the Treasury Board report included four measures to clarify the roles and responsibilities of Crown Corporations Board Members (Treasury

Board of Canada Secretariat, 2005).

Accountability is also strengthened through the clarity of the reporting structure of

Crown Corporations. Strong channels of communication between shareholders and the

Board are a key to good corporate governance (Aguilera, 2005). In Crown Corporations, clarity of the reporting relationships is enhanced by several measures announced in the

Treasury Board report. These measures highlight that the CEO is accountable to the

Board, the Board is accountable to the Minister and the Minster is accountable to

Parliament. Additional measures announced are to ensure that Board members understand their role in the governance of Crown Corporations. - 8 -

Independence

The need for the independence of directors has been well established in the field of corporate governance. It is one of the key recommendations in the Cadbury Report

(Cadbury, 1992), as well as various subsequent studies on Board effectiveness such as

Short et el 1998 (Short, Keasey, Hull, & Wright, 1998) and Cornforth 2001. One of the main recommendations of the Cadbury report is the division of responsibility at the head of the company to ensure that no one individual has the full power of decision (Jones &

Pollitt, 2003). The division of the role of CEO and Chair of the Board is a key measure announced by the Government for the governance of Crown Corporations.

The concept of the independence of directors from the executive management of the corporation is the focus of numerous studies on corporate governance and the functioning of Boards. The Higgs review highlights the need to strengthen the independence of non-executive directors (Higgs, 2003). The Auditor General has criticized several Crown Corporations for having an over representation of public servants on their Boards, who are not independent from management (Auditor General of

Canada, 2005). The measures announced by the Government to regulate the independence of Crown Corporations directors and to separate the functions of the CEO and the Chair on their Boards is in support of the established requirements for Boards to be independent in order to effectively monitor and control Crown Corporations.

Effectiveness

While the effectiveness of Boards can be broadly defined to encompass the selection, development and assessment of Board members, it has been narrowly defined in this study to encompass the training, development and assessment functions only. The - 9 - selection of the CEO and Board members is dealt with under the separate theme of

“appointment process.” The reason for this is that the number of measures announced that were related to the selection process was great enough to warrant its own category.

The effectiveness of Boards is linked to the training and development of individual directors and to the Boards on-going self-assessment. Self- assessment of the effectiveness of Boards has been well established as the mechanism for ensuring Board performance at acceptable levels (Brown, 2007). Although the effective performance of

Boards is not necessarily guaranteed by a regular assessment process, it is shown to be greatly enhanced by this practice (Brown, 2007).

Studies on the effectiveness of Boards focus around the recruitment and orientation of Board members and periodic reviews of the Board’s evaluations. Self evaluations of the Board include assessments of the performance of the Board as a whole, individual Board members and Board committees. Cornforth 2001 defines Board effectiveness as Board members having the skills to do the job, clear roles and responsibilities and periodically reviews of how the board and management work together. Ensuring that Board members have the skills to do the job is a function of the recruitment practices. Recruitment practices encompass a large number of measures announced by the Government in 2005 and is treated as a separate category in this study, leaving the category of effectiveness with two measures, the first that the Board adopt a charter and second, that the Board conduct regular Board assessments.

It is assumed that the adoption of a Board charter which clearly defines the role of the Board, its committees and individual members will allow for the appropriate establishment of Board assessment criteria. Therefore the measures of adopting a charter - 10 - and conducting periodic Board assessments will enhance the overall effectiveness of

Crown Corporation Boards.

Audit Committees

Many corporate reforms and regulators have focused on the establishment of an independent audit committee to ensure that Boards of Directors effectively fulfill their financial and fiduciary responsibilities to citizens (Finegold, Benson, & Hecht, 2007).

Puri 2010 defines the audit committee as a key institution in the context of corporate governance. The role of the audit committee is to provide the Board with a direct line of communication between internal and external auditors and allows directors to fulfill their responsibilities with respect to reporting, internal control and risk management (Puri,

Trehan, & Kakkar, 2010).

In Crown Corporations, the measures announced by the Government to establish an audit committee with independent directors who have financial expertise meets the standards set for audit committees by the Higgs report, Sarbanes Oxley and various other regulating bodies worldwide.

Appointment Process

The two most important decisions a Board makes is the hiring of the CEO and the appointment of the Chair of the Board (Leblanc, 2005). In order to effectively make these decisions, Boards need to be actively involved in all aspects of the process and require formal position descriptions in order to effectively manage the selection process

(Leblanc, 2005). The effectiveness of Boards has been shown to be directly impacted by whether they had the right mix of skill and experience (Cornforth, 2001). Therefore a clear understanding of the Board’s needs and an effective recruitment process to ensure - 11 - the right fit, are essential to establishing and maintaining an effective Board (Brown,

2007). This requires a clear terms of reference for selection criteria for Board members and CEOs (Brown, 2007). The measures suggested for the appointment process for

Crown Corporations reflects the importance of establishing selection criteria and the management of a formal recruitment process by the Board.

Transparency

The Government measures for Crown Corporations identified under transparency relate to disclosure and reporting issues. Keeping shareholders, or in the case of Crown

Corporations, the Government and the public, informed of the corporations activities, funding and governance practices is necessary to ensure that accountability is maintained.

By establishing regulations on reporting requirements, the Government is able to expect consistency and is therefore able to properly monitor the management of Crown

Corporations.

Although Audit committees ensure financial and fiduciary accountability, the special examinations of Crown Corporations is a further step in ensuring overall governance issues are addressed. In requiring special examinations of Crown

Corporations, the government is effectively regulating the implementation of all the measures it announced to ensure the effective governance of its Crown Corporations.

Gaps and Future Research

The measures announced for Crown Corporations cover a broad expanse of issues in governance as discussed in studies used by regulating bodies, such as the Cadbury

Report, the Higgs Review, and the Dey Report to create regulations and policies designed to enhance the governance of Corporations. However, the actual effectiveness of all the - 12 - measures announced has not been established. There is still discussion over the effectiveness of the separation of the CEO and Chair, for example, and many successful

US companies have not adopted this practice.

The Government’s intention by implementing the 31 measures announced was to strengthen transparency and accountability in Crown Corporations (Treasury Board of

Canada Secretariat, 2005). The measures were intended to improve the governance of

Crown Corporations and to create standard practices that would allow for greater oversight of the corporations governance and ensure that the outcomes would be in the best interest of Canadians. More importantly, the measures were intended to reduce or eliminate the risks of Crown Corporations misusing government funds as had been the case in the Sponsorship scandal of 2004.

Some of the measures announced are not clearly defined which makes it challenging to determine if they in fact have been implemented. A clear definition of how to evaluate each measure is needed in order to study their implementation. This is undertaken in this study.

Since the 2005 Treasure Board Report announcing the 31 governance measures to be incorporated by Crown Corporations, the Auditor General has completed 30 special examinations showing an increasing improvement in the governance of Crown

Corporations. However, since the 2005 report, a comprehensive study of the implementation of the 31 measures in all 46 Crown Corporations had not been conducted.

Summary

Previous studies in Canada, the UK and the US have identified a number of best practices in the field of corporate governance. In recent years, the Canadian Government - 13 - has implemented regulations and policies on corporate governance based on these best practices. Despite on-going discussions of the effectiveness of certain best practices, the majority of the studies on good corporate governance indicate that these practices do in fact improve the governance structures of those Corporations who implement them. But the sponsorship scandal of 2004 revealed serious weakness in the areas of accountability and transparency in Canadian Crown Corporations. The adoption of the 31 measures the

Government announced in 2005 was intended to improve the corporate governance of

Crown Corporations and to implement the best practices established by regulators of public corporations in order to eliminate the type of illegal activity in Crown

Corporations that resulted in the sponsorship scandal. Without making a judgment on the effectiveness of these measures, this study is the first comprehensive review of the implementation of these measures in all 46 Federal Crown Corporations. The purpose of this study is to clearly define the 31 measures and to determine if they have in fact been implemented in all 46 Crown Corporations. This study is a necessary first step in eventually discovering if the measures adopted by the Government in response to serious weakness in the governance of Crown Corporations have been effective. - 14 -

CHAPTER 3: METHODOLOGY

Content Analysis

Content analysis is a research method that is used by researchers to analyze a given text (Weber, 1990). The method uses a set of pre-defined procedures, specifically designed with relevance to the research question, to make inferences from the written material they are attempting to analyze (Weber, 1990). The method may be used, amongst other things, to audit communication content from text against specific pre- defined objectives (Weber, 1990). Issues arise in the use of content analysis with respect to the consistency or reliability of text classification, generally caused by the ambiguity of word meanings (Weber, 1990). It is therefore important, when analyzing text against objectives, that the objectives and the key words or phrases being sought are clearly pre- defined. Content analysis techniques are used for a large variety of studies. Examples of studies using content analysis techniques include a study on the effectiveness of online project-based learning activities in a management course (Hou, 2010), a study to determine the type of science and the quantity of science in popular US readers of the 19th century (Rillero, 2010), a web-based content analysis of the management education for sustainability-related curricula of business schools (YEN-CHUN JIM, HUANG, LOPIN,

& WEN-HSIUNG, 2010), and two studies of codes of ethics and whistle blowing policies

(Hassink, Vries, & Bollen, 2007)

In this study, the content analysis was based on 31 measures pre-set by definitions established by the Treasury Board. Since some measures have ambiguous meanings, a coding scheme was developed by the researcher, similar to the design of Hou, 2010 study and a dictionary of suitable meanings was established for the more ambiguous - 15 - government measures. Annex A contains the 31 coded measures, with highlights indicating the key words used for the analysis phase and the measures definition dictionary used for each measure.

Reliability testing is a key component of content analysis (Weber, 990). There are three types of reliability testing used in content analysis; stability, reproducibility, and accuracy (Krippendorff 1980). Stability is said to be achieved when the same content is coded more than once by the same coder (Weber, 1990). To address reliability of the analysis in this study, all documentation was reviewed twice by the same reviewer.

Initially words and phrases identified by the researcher as relating to the measures were coded as evidence that a particular measure had been met. In the second review, coded sections were verified against the established definitions for the measures and documentation was re-examined to ensure that there were no words or phrases found for measures that had not been met in the first review. To ensure inter-coder reliability a random sample of the research material selected from Crown Corporation’s was coded by a second reviewer.

Analysis Framework

This research examines the current corporate governance structures, in 2010, of

Canadian Federal Crown Corporations in relation to 31 measures the Government announced in 2005 in the Treasury Board Secretariat document, Meeting the Expectations of Canadians - Review of the Governance Framework for Canada’s Crown

Corporations, 2005. - 16 -

The question posed by the researcher is; of the 31 measures announced by the

Government in 2005, how many have been implemented in each of Canada’s 46 Crown

Corporations by 2010?

The 46 Canadian Crown Corporations were identified from the Treasury Board’s

Annual Report to Parliament – Crown Corporations and Other Corporate Interests of

Canada 2010. The Treasury Board report listed 48 Crown Corporations; two were excluded from this study. The Canada Development Investment Corporation was excluded as its mandate is to wind down its operations and ready the corporation for eventual dissolution. The Corporation for the Mitigation of Mackenzie Gas Project

Impacts was excluded as the Corporation was established to administer funds should the project proceed. Although the Mackenzie Gas Project received approval to proceed in

May 2011, the approval was outside the time-frame for this paper. Table one lists the 46

Canadian Crown Corporations which are included in this study.

Table 1 – List of 46 Crown Corporations Crown Corporations – Agent Status Name of Institution Portfolio Atomic Energy of Canada Limited Natural Resources Business Development Bank of Canada Industry Canada Deposit Insurance Corporation Finance Canada Lands Company Limited Transport, Infrastructure and Communities Canada Post Corporation Transport, Infrastructure and Communities Canadian Air Transport Security Authority Transport, Infrastructure and Communities Canadian Broadcasting Corporation Canadian Heritage and Official Languages Canadian Commercial Corporation Foreign Affairs and International Trade Canadian Dairy Commission Agriculture and Agri-Food Canadian Museum for Human Rights Canadian Heritage and Official Languages Canadian Museum of Civilization Canadian Heritage and Official Languages Canadian Museum of Nature Canadian Heritage and Official Languages Canadian Tourism Commission Industry Defence Construction (1951) Limited Public Works and Government Services Enterprise Cape Breton Corporation Atlantic Canada Opportunities Agency Export Development Canada Foreign Affairs and International Trade Farm Credit Canada Agriculture and Agri-Food - 17 -

Federal Bridge Corporation Limited, The Transport, Infrastructure and Communities Freshwater Fish Marketing Corporation Fisheries and Oceans National Capital Commission Transport, Infrastructure and Communities National Gallery of Canada Canadian Heritage and Official Languages National Museum of Science and Canadian Heritage and Official Languages Technology Old Port of Montréal Corporation Inc. Transport, Infrastructure and Communities Parc Downsview Park Inc. Transport, Infrastructure and Communities Royal Canadian Mint Transport, Infrastructure and Communities Telefilm Canada Canadian Heritage and Official Languages

Crown Corporations with Partial Agent Status Name of Institution Portfolio Bank of Canada Finance Canada Mortgage and Housing Human Resources and Skills Development Corporation

Crown Corporations with Non-Agent Status Name of Institution Portfolio Atlantic Pilotage Authority Transport, Infrastructure and Communities Blue Water Bridge Authority Transport, Infrastructure and Communities Canada Council for the Arts Canadian Heritage and Official Languages Canada Employment Insurance Financing Human Resources and Skills Development Board Canada Pension Plan Investment Board Finance Canadian Race Relations Foundation Citizenship, Immigration and Multiculturalism First Nations Statistical Institute Indian Affairs and Northern Development Great Lakes Pilotage Authority Transport, Infrastructure and Communities International Development Research Foreign Affairs and International Trade Centre Laurentian Pilotage Authority Transport, Infrastructure and Communities Marine Atlantic Inc. Transport, Infrastructure and Communities National Arts Centre Corporation Canadian Heritage and Official Languages Pacific Pilotage Authority Transport, Infrastructure and Communities PPP Canada Inc. Finance Public Sector Pension Investment Board Treasury Board Ridley Terminals Inc. Transport, Infrastructure and Communities Standards Council of Canada Industry VIA Rail Canada Inc. Transport, Infrastructure and Communities Adapted from the Treasury Board Secretariat Annual Report to Parliament- Crown Corporations and Other Corporate Interests of Canada, 2010

- 18 -

The 31 measures were grouped into seven themes; accountability, independence,

Board member effectiveness, audit committee effectiveness, appointment process, transparency and further development required for implementation. Annex A identifies the 31 coded measures, with highlights indicating the key words and data dictionary used for the analysis phase. Table two indicates the groupings of each measure within these seven themes.

Table 2 - Seven Themes for 31 Measures Code Proposed Theme Measures – by number code A Accountability 1, 2, 3, 4 B Independence 5, 6, 7, 8 C Board Member Effectiveness 9, 10, 11, 12 D Audit Committee Effectiveness 13, 14, 15, 26 E Appointment Process 16, 17, 18, 19, 20, 21 F Transparency 22, 23, 25, 27, 28, 29 G Further Development Required for 24, 30, 31 Implementation

Refer to Annex A for definitions of each measure.

The theme of Accountability encompassed four measures:

One describes the relationship between Parliament, the responsible

Minister, the Board of Directors and the CEO.

Two affirms that the responsible Minister is the Government’s

representative.

Three requires that the Minister issue a statement of priorities and

accountabilities to Crown Corporations.

Four requires the Government to embody the role and responsibilities of

directors in legislation. - 19 -

Independence encompassed the following four measures:

One restricts or eliminates the appointment of public servants as directors on the Boards of Crown Corporations.

Two ensures, through legislation, a split in the positions of CEO and chair of the Board.

Three requires that the CEO be the sole representative of management to the Board of Directors.

Four requires the Boards of Directors to hold annual public meetings.

Board Member Effectiveness had the following four measures:

One requires the Government to issue a guidance letter to every new director upon appointment.

Two requires the Boards to adopt a charter.

Three requires the Canada School of Public Service to establish training and professional development programs on public sector management and Crown

Corporations.

Four requires Boards of Directors to implement regular assessments of their effectiveness.

The theme of Audit Committee Effectiveness included four measures:

One requires Crown Corporations to establish an audit committee.

Two requires that all directors on the audit committee be independent.

Three ensures that internal and external auditors report directly to the audit committee. - 20 -

Four ensures that the Auditor General of Canada be appointed as the auditor or joint auditor for all Crown Corporations.

Appointment Process encompassed the following six measures:

One ensures that selection criteria for chairs and Board profiles are made public.

Two requires the development of a central Web site to solicit potential candidates for director and chair positions.

Three requires the selection process for the CEO be determined by the

Board.

Four requires references be obtained for all candidates for appointment as director or chair.

Five requires that an appointment review process be established that will not unduly delay appointments.

Six affirms that appointments will be up to four years.

The theme of transparency included six measures:

One requires the Government to issue a guidance document on annual report specifications.

Two requires that the main estimates clearly identify the funds allocated to

Crown Corporations that receive parliamentary appropriations.

Three requires the Access to Information and Privacy legislation to be extended to 10 additional Crown Corporations.

Four, ensures that the Auditor General will be given the authority to conduct special examinations on all Crown Corporations. - 21 -

Five requires that at a minimum all corporations undergo special

examinations every eight years.

Six requires that special examinations be submitted to the Board of

Directors, the responsible Minister, the Treasury Board and Parliament and that a

protocol is developed relating to the release of special examinations to protect

commercial interests of Crown Corporations.

Three measures were categorized as requiring further development for implementation:

One requires the development of a certification regime.

Two requires a review of the compensation provided to chairs and

directors.

Three requires the development of regulations to provide for an advance of

costs to directors.

Nine of the thirty-one measures required legislative changes to the Financial

Administration Act and/or to the specific statutes creating the Crown Corporations in order to be fully implemented. Table three shows these nine measures and their equivalent themes. Measure number twenty-five, (refer to Annex A for a description), requires amendments to the Access to Information Act.

Table 3 - Measures requiring legislation change Code Equivalent to Description Theme L1 A1 Describe the relationships between Parliament, the responsible Minister, the Board of Directors and the CEO L2 A2 The government will affirm that the responsible Minister is its representative. L4 A4 In order to reaffirm that Boards of Directors are accountable for the activities and performance of the corporation to the responsible Minister, the government will embody the role and - 22 -

the responsibilities of directors in Part X of the FAA and in other enabling statutes. L5 B5 The government will review the appointment of public servants as directors on the Boards of Crown corporations with a view to restricting or eliminating their participation. L6 B5 The government will enact the legislative changes required to ensure a split in the positions of CEO and chair of the Board for Crown corporations. L21 E21 Provide for appointments for up to four years. L26 D26 Allow for the appointment of the Auditor General of Canada as the external auditor or joint auditor for all Crown corporations L27 F27 Provide the Office of the Auditor General of Canada with the authority to conduct special examinations in all Crown corporations

Using the 31 measures and their data dictionary definitions shown in Annex A and the coding shown in Tables two and three, the text from Government and Crown

Corporations websites was examined and coded as having met or not met the requirement for each measure. If a measure had two or more independent variables, all of them must have been found in the text in order to meet the requirement. For example measure D13, the requirement to establish an audit committee, also required that the committee have a minimum of three members and that the committee adopt an audit plan. In order to meet the requirement D13, Crown Corporations had to state than an audit committee with a minimum of three members was in place and that one of their functions was to adopt an audit plan. If any one of these requirements was not stated, the results were coded as not having met the requirement for D13.

Research Context

Documents were gathered from the Crown Corporations and Government websites for coding. If documents or specific text relating to a measure was not found on the corporation’s website or related websites, the measure was coded as not meeting the - 23 - requirement. Enabling statutes or Acts and annual reports for 2010 of all 46 Crown

Corporations were reviewed for evidence of each of the 31 measures. In addition, the following documents were reviewed for evidence of the 31 measures, provided the documents were available through the websites: the corporation’s by-laws, Board and committee charters, plans and priorities or corporate plans, Board structure, and Auditor

General Special Examinations from 2006 to 2011. Auditor General Special

Examinations were only reviewed if they were completed after the release of the 2005

Treasury Board document, Meeting the Expectations of Canadians - Review of the

Governance Framework for Canada’s Crown Corporations. For the 11 measures the

Government had to implement, Government websites were searched for documents related to each measure. A list of websites examined can be found in Annex B. Tables 6 and 7 on pages 30 and 37 show the results of the data analysis for 17 of the 21 measures

Crown Corporations were to implement.

Additional information was gathered regarding the size of Boards, their composition, and length of appointments of members, if appointments were staggered, and remuneration. Reference is made to this information in Table 10 on page 51 in the results section.

Research Summary

To summarize, the research undertaken for this study included a comprehensive review and analysis of all publicly available information on the enabling legislation and governance structures of the 46 Federal Crown Corporations to indentify implementation of the 31 measures announced by the Government in 2005 as required for their governance. In addition, the research reviewed the publically available information on - 24 - the measures implemented by Government departments and agencies, such as the Privy

Council Office and the Canada School of Public Service in support of the improvement of governance in Crown Corporations. - 25 -

CHAPTER 4: FINDINGS

Method

Government Measures

Of the thirty-one measures to be implemented to improve governance in Crown

Corporations, eleven were to be implemented by the Treasury Board or other

Government departments. Evidence that many of these measures were implemented can be found in a number of Crown Corporation’s annual reports. However some could not be verified using publically available information. A list of the seven measures that

Government departments would have to implement that could not be verified can be found in Table 4 along with the reasons verification was not possible.

Table 4 - Measures Requiring Government Implementation That Could Not Be Verified Code Description Reason C9 To assist the work of Board members, the Correspondence sent to Directors not Government will issue to every new director, publically available upon appointment, a guidance letter that would make explicit the expectations of the government with regard to the role and responsibilities of directors under law and in practice. The letter would also include provisions related to the values and ethics of public office holders and disclosure of conflict of interest. E19 The Government will obtain references on all Details of the Government’s process candidates for appointment as director or for appointment not publically chair. In the case of CEOs, the Board’s available nominating committee will be required to do the same for any candidate it submits to the Government for appointment. In addition, the Government will continue to conduct background checks and ensure that candidates are not in a conflict of interest, prior to making any appointment. - 26 -

F22 To respond to the public interest in non- Guidance document with financial issues, the Treasury Board of Canada specifications for discussion and Secretariat will produce a guidance document analysis section and issues pertaining for Crown Corporations on annual report values and ethics not publically specifications, including the Management’s available. Discussion and Analysis Section and issues pertaining to values and ethics. F28 The Government will establish a more flexible Plan for frequency of special system for the timing of special examinations, examinations is not publically reflective of the level of risk related to each available. A full 8 year cycle has not corporation. The risk analysis would be based passed since 2005 so frequency cannot on the complexity of the organization, the field be verified. Legislation still gives 10 of operation, and the changes taking place in year minimum requirement for many the business and policy environment that may Crown Corporations. 30 of the 46 impact on the corporation. The Office of the Crown Corporations have had special Auditor General of Canada would have the examinations completed since 2005. responsibility for determining the frequency of special examinations for each Crown Corporation. At a minimum, all corporations would undergo a special examination every eight years. F29 The Government will require that each special Protocol on release of special examination report prepared by the Auditor examinations is not publically General be submitted to the Board of available. Directors, the responsible Minister, the Treasury Board, and Parliament, to maximize the value of these reports to Canadians. In accordance with the provisions of the FAA to protect commercial interests of a parent Crown Corporation or a wholly-owned subsidiary of a parent Crown Corporation, the government will work with the Office of the Auditor General of Canada to develop a protocol relating to the release of the special examination. G30 The Government will ask the Advisory Information not publically available. Committee on Senior Level Retention and Compensation to review the compensation provided to chairs and directors of Crown corporations. G24 In principle, the Government supports the use No evidence that the Government has of a certification regime adapted to the reality established criteria for a certificate of public institutions. The Treasury Board of regime. One Crown Corporation Canada Secretariat will examine, in mentioned in their annual report that consultation with Crown Corporations, the certification could not be done due to a development of a certification regime that lack of established criteria. - 27 -

would be applicable to all Crown Corporations.

The four measures that could be verified were C11, E17, F25 and G31. These measures were to establish additional training and professional development programs on public sector management and Crown Corporations, to develop a central Web site to solicit potential candidates for director and chair positions, to update Access to

Information and Privacy legislation to include ten additional Crown Corporations, exclude seven and delay inclusion for one, and to provide for an advance of costs in the

Financial Administration Act. The Government implemented these four measures. Table five lists the four measures and demonstrates how it can be verified that they were implemented by the Government.

Table 5 - Measures Requiring Government Implementation That Could Be Verified Code Description Verification C11 To further enhance the skills and performance Program for corporate governance of Boards of Directors and building on current found in the Canada School of Public orientation programs, the Canada School of Service curriculum. Public Service will establish additional training and professional development programs on public sector management and Crown Corporations. E17 The Government will develop a central Web Central website for Board vacancies site to solicit potential candidates for director found. and chair positions. Governor in Council Appointments http://www.appointments- nominations.gc.ca/ F25 The Access to Information Act should ATI Act amended to include: Canadian Development Investment Corporation, • be extended to 10 of the existing 18 Canadian Race Relations Foundation, Cape 1 Breton Development Corporation, Cape Breton Crown Corporations currently outside Growth Fund Corporation, Enterprise Cape

1 These are: Canadian Development Investment Corporation, Canadian Race Relations Foundation, Cape Breton Development Corporation, Cape Breton Growth Fund Corporation, Enterprise Cape Breton, Marine Atlantic Inc., Old Port of Montreal, Parc Downsview Park, Queens Quay West Land Corporation, and Ridley Terminal Inc. - 28 -

the provisions of the Act by an Order Breton, Marine Atlantic Inc., Old Port of Montreal, Parc Downsview Park, Queens in Council, Quay West Land Corporation, and Ridley Terminal Inc.

2 • not include seven Crown Corporations ATI Act does not include: VIA Rail, until the government has developed National Arts Centre, Canadian Broadcasting Corporation, Export Development Canada, mechanisms to protect their Canada Post Corporation, Atomic Energy of commercially sensitive information; Canada Limited and the Public Sector Pension Investment Board

ATI Act excludes the Canada Pension • not include the Canada Pension Plan Plan Investment Board Investment Board at this time because

of its federal-provincial structure. Its

inclusion will require provincial

consent;

ATI Act includes protection for • be amended to include protection for journalistic sources journalistic sources.

G31 The government intends to develop regulations The FAA allows for an advance of pursuant to the FAA to provide for an advance costs to directors. of costs to directors in much the same manner as in the Canada Business Corporation Act.

Findings

Legislative Changes

Of the 46 Crown Corporations studied only one had all eight legislative changes incorporated into its enabling legislation. Two had seven of the eight required legislative changes. The only missing requirement was the provision to allow the Auditor General to conduct special examinations. Since this provision is already in the Financial

Administration Act, and all Crown Corporations studied are subject to this Act, it could be argued that it is not necessary to repeat this requirement in the enabling legislation of

2 These are: Via Rail, National Arts Centre, Canadian Broadcasting Corporation, Export Development Canada, Canada Post Corporation, Atomic Energy of Canada Limited and the Public Sector Pension Investment Board.

- 29 - these Crown Corporations. Table 6 captures the results of the data analysis for the eight measures requiring legislative change. - 30 -

Table 6 – Data on Legislative Amendments

!"#$%&'% ()*+,+-+,&)% ./+% 01% 02% 03% 04% 05% 021% 025% 026% "#$%&'!()*+,-! 6! 7! 7! 7! 7! 7! 7! 7! $.!/0)010! 34'5*0+!()*+,-! 2&%&#*1! "'#! 849&)*99! 849&)*99! 6! 6! 6! 6! 6! 6! 7! 7! :*;*5$<%*)#! :*;*5$<%*)#! 80)=!$.!/0)010! 80)=!$.!/0)010! "'#! /0)010!:*<$9&#! /0)010!:*<$9&#! 6! 6! 7! 6! 7! 7! 7! 7! >)94+0)'*! >)94+0)'*! /$+<$+0#&$)! /$+<$+0#&$)!"'#! /0)010!20)19! /0)010! 7! 7! 6! 7! 7! 7! 7! 7! /$%<0)-! 849&)*99! 2&%&#*1! /$+<$+0#&$)9! "'#! /0)010!?$9#! /0)010!?$9#! 6! 6! 6! 7! 6! 6! 7! 7! /$+<$+0#&$)! /$+<$+0#&$)!"'#!

/0)01&0)!"&+! /0)01&0)!"&+! 6! 6! 6! 6! 6! 6! 6! 7! @+0)9<$+#! @+0)9<$+#! A*'4+&#-! A*'4+&#-! "4#B$+&#-! "4#B$+&#-!"'#! /0)01&0)! /0)01&0)! 6! 6! 6! 7! 7! 6! 6! 7! 8+$01'09#&),! 8+$01'09#&),! /$+<$+0#&$)! "'#! /0)01&0)! /0)01&0)! 7! 7! 7! 7! 6! 6! 6! 7! /$%%*+'&05! /$%%*+'&05! /$+<$+0#&$)! /$+<$+0#&$)!"'#! /0)01&0)!:0&+-! /0)01&0)!:0&+-! 7! 7! 7! 7! 6! 7! 7! 7! /$%%&99&$)! /$%%&99&$)!"'#! /0)01&0)! 6! 6! 6! 7! 6! 6! 6! 7! C49*4%!.$+! D4%0)!E&,B#9! C49*4%9!"'#! /0)01&0)! 6! 6! 6! 7! 6! 6! 6! 7! C49*4%!$.! /&;&5&F0#&$)! C49*4%9!"'#! /0)01&0)! 6! 6! 6! 7! 6! 6! 6! 7! C49*4%!$.! 30#4+*! C49*4%9!"'#! - 31 -

!"#$%&'% ()*+,+-+,&)% ./+% 01% 02% 03% 04% 05% 021% 025% 026% /0)01&0)! /0)01&0)! 7! 7! 6! 7! 6! 6! 7! 7! @$4+&9%! @$4+&9%! /$%%&99&$)! /$%%&99&$)!"'#! :*.*)'*! :*.*)'*! 6! 6! 7! 7! 7! 7! 6! 7! /$)9#+4'#&$)! ?+$14'#&$)!"'#! G6HI6J!2&%&#*1! K!! /0)010! 849&)*99! /$+<$+0#&$)9! "'#L! ! ()#*+<+&9*!/0<*! ()#*+<+&9*!/0<*! 6! 7! 6! 7! 7! 6! 7! 7! 8+*#$)! /$+<$+0#&$)!"'#! /$+<$+0#&$)! (M<$+#! (M<$+#! 6! 7! 6! 7! 7! 6! 6! 6! :*;*5$<%*)#! :*;*5$<%*)#! /0)010! "'#! N0+%!/+*1&#! N0+%!/+*1&#! 7! 7! 6! 7! 6! 6! 7! 7! /0)010! :*;*5$<%*)#! "'#! N*1*+05!8+&1,*! /0)010! 7! 7! 6! 7! 7! 7! 7! 7! /$+<$+0#&$)! 849&)*99! 2&%&#*1! /$+<$+0#&$)9! "'#! N+*9BO0#*+!N&9B! N+*9BO0#*+!N&9B! 7! 7! 6! 7! 7! 6! 7! 7! C0+=*#&),! C0+=*#&),!"'#! /$+<$+0#&$)! 30#&$)05!/0<! 30#&$)05!/0<! 6! 7! 6! 6! 6! 6! 6! 7! /$%%&99&$)! "'#!

30#&$)05!P055*+-! C49*4%9!"'#! 6! 6! 6! 7! 6! 6! 6! 7! $.!/0)010! ! 30#&$)05! C49*4%9!"'#! 6! 6! 6! 7! 6! 6! 6! 7! C49*4%!$.! A'&*)'*!0)1! @*'B)$5$,-! Q51!?$+#!$.! /0)010! 7! 7! 6! 7! 7! 7! 7! 7! C$)#+R05! 849&)*99! /$+<$+0#&$)!>)'L! /$+<$+0#&$)9! "'#! - 32 -

!"#$%&'% ()*+,+-+,&)% ./+% 01% 02% 03% 04% 05% 021% 025% 026% ?0+'! /0)010! 7! 7! 6! 7! 7! 7! 7! 7! :$O)9;&*O! 849&)*99! ?0+=!>)'L! /$+<$+0#&$)9! "'#! E$-05!/0)01&0)! E$-05!/0)01&0)! 6! 7! 6! 7! 6! 6! 6! 7! C&)#! C&)#!"'#!

@*5*.&5%!/0)010! @*5*.&5%!/0)010! 6! 6! 7! 7! 6! 6! 6! 7! "'#! 80)=!$.!/0)010! 80)=!$.!/0)010! 6! 6! 6! 6! 7! 7! 7! 7! "'#! /0)010! /0)010! 6! 6! 6! 6! 6! 7! 7! 7! C$+#,0,*!0)1! C$+#,0,*!0)1! D$49&),! D$49&),! /$+<$+0#&$)! /$+<$+0#&$)!"'#! ! "#50)#&'!?&5$#0,*! ?&5$#0,*!"'#! 6! 6! 6! 7! 7! 6! 6! 7! "4#B$+&#-!

854*!S0#*+! 854*!S0#*+! 7! 7! 6! 7! 7! 7! 7! 7! 8+&1,*! 8+&1,*! "4#B$+&#-! "4#B$+&#-!"'#! /0)010!/$4)'&5! /0)010!/$4)'&5! 6! 7! 6! 7! 6! 6! 6! 7! .$+!#B*!"+#9! .$+!#B*!"+#9!"'#! /0)010! /0)010! 6! 6! 6! 6! 6! 6! 6! 6! (%<5$-%*)#! (%<5$-%*)#! >)94+0)'*! >)94+0)'*! N&)0)'&),!8$0+1! N&)0)'&),!8$0+1! "'#! /0)010!?*)9&$)! /0)010!?*)9&$)! 6! 6! 6! 6! 6! 7! 7! 6! ?50)!>);*9#%*)#! ?50)! 8$0+1! >);*9#%*)#! 8$0+1!"'#! /0)01&0)!E0'*! /0)010!E0'*! 6! 6! 6! 6! 6! 6! 7! 7! E*50#&$)9! E*50#&$)9! N$4)10#&$)! N$4)10#&$)!"'#! N&+9#!30#&$)9! N&+9#!30#&$)9! 7! 7! 7! 7! 6! 6! 7! 6! A#0#&9#&'05! N&9'05!0)1! >)9##*! A#0#&9#&'05! C0)0,*%*)#! "'#! - 33 -

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

???!/0)010!>)'L! /0)010! 7! 7! 6! 7! 7! 7! 7! 7! 849&)*99! /$+<$+0#&$)9! "'#! ?4V5&'!A*'#$+! /0)010! 6! 6! 6! 6! 6! 6! 7! 7! ?*)9&$)! 849&)*99! >);*9#%*)#! /$+<$+0#&$)9! 8$0+1! "'#! E&15*-! /0)010! 7! 7! 6! 7! 7! 7! 7! 7! @*+%&)059!>)'L! 849&)*99! /$+<$+0#&$)9! "'#! A#0)10+19! A#0)10+19! 7! 7! 6! 6! 6! 6! 6! 7! /$4)'&5!$.! /$4)'&5!$.! /0)010! /0)010!"'#! W>"!E0&5!/0)010! W>"!E0&5!/0)010! 7! 6! 6! 7! 6! 7! 7! 7! >)'L! "'#!

- 37 -

Table 7 – Data on 8 Crown Corporation Measures for Accountability, Independence and Effectiveness

Accountability Independence Effectiveness Name of Institution A1 A2 A4 B5 B6 B8 C10 C12 Atomic Energy of Canada 1 1 0 0 0 0 1 1 Limited

Business Development Bank 1 1 1 1 1 1 1 1 of Canada

Canada Deposit Insurance 1 1 0 1 0 1 1 1 Corporation Canada Lands Company 0 0 1 0 0 1 1 1 Limited

Canada Post Corporation 1 1 1 0 1 1 1 1

Canadian Air Transport 1 1 1 1 1 1 1 0 Security Authority

Canadian Broadcasting 1 1 1 0 0 1 0 0 Corporation Canadian Commercial 1 1 0 0 1 1 0 1 Corporation Canadian Dairy Commission 1 0 0 0 1 1 0 1

Canadian Museum for Human 1 1 1 0 1 1 1 1 Rights Canadian Museum of 1 1 1 0 1 1 0 0 Civilization Canadian Museum of Nature 1 1 1 0 1 1 1 1

Canadian Tourism 1 1 1 0 1 1 1 1 Commission

Defence Construction (1951) 1 1 0 0 0 1 1 1 Limited Enterprise Cape Breton 1 0 1 0 0 1 1 1 Corporation - 38 -

Accountability Independence Effectiveness Name of Institution A1 A2 A4 B5 B6 B8 C10 C12 Export Development Canada 1 0 1 1 0 1 1 1

Farm Credit Canada 1 1 1 0 1 1 1 1

Federal Bridge Corporation 0 0 1 0 1 1 1 1 Limited

Freshwater Fish Marketing 0 0 1 0 0 0 0 0 Corporation National Capital Commission 1 0 1 1 1 1 0 1

National Gallery of Canada 1 1 1 0 1 1 1 1

National Museum of Science 1 1 1 0 1 0 1 and Technology Old Port of Montréal 0 0 1 0 0 0 1 1 Corporation Inc.

Parc Downsview Park Inc. 0 0 1 1 1 0 1 0

Royal Canadian Mint 1 1 1 0 1 1 1 1

Telefilm Canada 1 1 0 0 1 1 1 1

Bank of Canada 1 1 1 1 0 0 1 1

Canada Mortgage and Housing 1 1 1 1 1 1 1 1 Corporation Atlantic Pilotage Authority 1 1 1 0 0 0 0 0

Blue Water Bridge Authority 0 0 1 0 0 0 0 0

Canada Council for the Arts 1 1 1 0 1 1 1 1 - 39 -

Accountability Independence Effectiveness Name of Institution A1 A2 A4 B5 B6 B8 C10 C12 Canada Employment 1 1 1 1 1 0 0 0 Insurance Financing Board

Canada Pension Plan 1 1 1 1 1 1 0 1 Investment Board Public Sector Pension 1 1 1 1 1 1 1 1 Investment Board

Canadian Race Relations 1 1 1 1 1 1 1 0 Foundation

First Nations Statistical 0 0 0 0 1 1 0 0 Institute Great Lakes Pilotage 1 1 1 0 0 0 0 0 Authority

International Development 0 1 1 1 1 1 1 1 Research Centre

Laurentian Pilotage Authority 1 1 1 0 0 0 0 0

Marine Atlantic Inc. 0 0 1 0 0 0 1 0

National Arts Centre 1 1 1 1 1 1 1 0 Corporation Pacific Pilotage Authority 1 1 1 0 0 0 0 0

PPP Canada Inc. 0 1 1 0 1 1 1 1

Ridley Terminals Inc. 0 0 1 0 0 0 0 0

Standards Council of Canada 0 1 1 1 1 1 1 1

- 40 -

Accountability Independence Effectiveness Name of Institution A1 A2 A4 B5 B6 B8 C10 C12 VIA Rail Canada Inc. 0 1 1 0 1 0 0 0

Total Met Requirement 32 32 39 14 28 31 29 29 Percent Met Requirement 68% 68% 83% 30% 60% 66% 62% 62%

Table 8 – Data on 8 Crown Corporation Measures for Audit Committee, Appointment Process and Transparency

Audit Committee Appt. Process Transparency Name of Institution D13 D14 D15 D26 E16 E18 E21 F23 F27 Atomic Energy of 1 1 1 1 1 1 0 1 1 Canada Limited

Business Development 1 1 1 1 1 1 1 1 1 Bank of Canada Canada Deposit 1 1 1 1 1 1 0 0 1 Insurance Corporation Canada Lands 1 1 1 1 1 0 0 1 1 Company Limited

Canada Post 1 1 1 1 1 1 1 0 1 Corporation

Canadian Air 1 1 1 1 0 1 1 0 1 Transport Security Authority Canadian 1 0 0 1 0 0 1 1 1 Broadcasting Corporation Canadian Commercial 1 0 0 1 1 1 1 1 0 Corporation Canadian Dairy 0 0 0 1 0 0 0 1 0 Commission Canadian Museum for 1 0 0 1 1 1 1 1 0 Human Rights Canadian Museum of 0 0 0 1 0 0 1 1 0 Civilization - 41 -

Audit Committee Appt. Process Transparency Name of Institution D13 D14 D15 D26 E16 E18 E21 F23 F27 Canadian Museum of 0 0 0 1 1 0 1 1 0 Nature Canadian Tourism 1 1 1 1 1 0 1 1 0 Commission Defence Construction 1 1 1 1 1 1 0 1 1 (1951) Limited Enterprise Cape 1 0 0 1 1 0 0 0 1 Breton Corporation Export Development 1 1 1 1 1 1 1 0 1 Canada Farm Credit Canada 1 1 1 1 1 1 1 1 1

Federal Bridge 0 0 0 1 0 0 0 1 0 Corporation Limited

Freshwater Fish 0 0 0 0 0 0 1 1 1 Marketing Corporation National Capital 0 0 0 1 0 0 1 1 1 Commission

National Gallery of 0 0 0 1 1 0 1 1 1 Canada National Museum of 0 0 0 1 0 0 1 1 1 Science and Technology

Old Port of Montréal 1 0 0 1 1 0 0 0 0 Corporation Inc.

Parc Downsview Park 1 1 1 1 1 0 0 0 1 Inc.

Royal Canadian Mint 1 1 1 1 1 1 1 1 1

Telefilm Canada 1 0 0 1 1 1 1 1 1

Bank of Canada 1 1 1 0 0 1 0 0 0

- 42 -

Audit Committee Appt. Process Transparency Name of Institution D13 D14 D15 D26 E16 E18 E21 F23 F27 Canada Mortgage and 0 1 0 0 1 1 1 1 Housing Corporation

Atlantic Pilotage 0 0 0 1 0 0 1 0 0 Authority

Blue Water Bridge 1 0 1 0 0 0 0 0 1 Authority

Canada Council for 1 0 1 1 1 1 1 1 1 the Arts Canada Employment 1 0 0 1 0 0 1 0 0 Insurance Financing Board Canada Pension Plan 1 1 0 0 1 0 0 0 0 Investment Board

Public Sector Pension 1 1 1 1 1 1 1 0 0 Investment Board

Canadian Race 0 0 0 1 0 0 1 0 1 Relations Foundation

First Nations 0 0 0 0 0 0 1 1 0 Statistical Institute

Great Lakes Pilotage 1 0 0 1 0 0 1 0 0 Authority

International 1 1 0 1 1 1 1 1 1 Development Research Centre Laurentian Pilotage 0 0 0 1 0 0 1 0 0 Authority

Marine Atlantic Inc. 1 1 0 1 1 1 0 1 1

National Arts Centre 0 0 0 1 0 1 1 0 0 Corporation - 43 -

Audit Committee Appt. Process Transparency Name of Institution D13 D14 D15 D26 E16 E18 E21 F23 F27 Pacific Pilotage 0 0 0 1 0 0 1 0 0 Authority

PPP Canada Inc. 1 0 0 1 0 1 1 1 0

Ridley Terminals Inc. 1 0 0 1 0 0 0 0 0

Standards Council of 1 1 0 1 1 1 1 1 1 Canada VIA Rail Canada Inc. 0 0 0 0 0 0 0 0 0

Total Met 30 19 16 39 25 21 30 26 24 Requirement Percent Met 64% 40% 34% 83% 53% 45% 64% 55% 51% Requirement

Legend: 1 = Requirement met 0 = Requirement not met

- 50 -

Transparency

Two of five measures for transparency had valid results since one measure under the heading of transparency was deleted from the results as statistically invalid and two measures under this heading were to be implemented by the Government rather than the

Crown Corporations. Measure F23 requires that Crown Corporations must clearly state their government appropriations in their main estimates. Crown Corporations with

Government loans are include in the results for this measure. Five Crown Corporations are not subject to appropriations and therefore are excluded from reporting on this measure. Refer to Table 9.

Table 9 – Crown corporations not subject to government appropriations

1 Bank of Canada

2 Canadian Deposit Insurance Corporation

3 Canadian Pension Plan Investment Board

4 Defence Construction Canada

5 Export Development Canada

26 of 41 Crown Corporations, or 63% of those required to, reported on the funds allocated through appropriations or loans, and 24 of the 46, or 51% of the Crown

Corporations reported that the Auditor General had the authority to conduct special examinations of the Corporation. Figure ten illustrates these results.

- 52 - highest Chair retainer amount is $50,000, then $20,500. If we remove the lowest and two highest retainer amounts, the range for the Chair’s retainers is from $6,000 to $20,500.

Most Chair retainer amounts are reported as a range rather than a specific amount. If we take the top of the range given for these 29 Crown Corporations, the average Chair’s retainer amount is $10,557.

Board Diversity

The number of women on Boards is a current topic of discussion regarding the diversity of Boards. Five of the 46 Crown Corporations studied did not have any women members and one Crown Corporation, the Blue Water Bridge Authority, had all women

Board members. Overall, 35% of the current Board members for all 46 Crown

Corporations were women. While this percentage is higher than the percentage of women serving on Boards in the private sector, further study of the distribution and remuneration of women on Crown Corporation Boards is needed. There is a considerable range amongst the Crown Corporation Boards which an overall percentage does not illuminate. Table 10 provides the additional information gathered on the number of women on the Boards, and the Board member and Chair’s retainer amounts. - 53 -

Table 10 – Diversity and Remuneration Information Gathered on Crown Corporation

!"#$%&'% .DD+E% H+"FF$=$I% !&E% !&E% B% .))-"8% MG",=% ()*+,+-+,&)% 0$)F+G% .DD+E% A"J% :$#K$=*%% L&#$)% L&#$)%% ;$+",)$=% ;$+",)$=% "#$%&'! X! 6! 6! H! X! XXY! Z[\677!U! Z6^\^77!U! ()*+,-!$.! Z]\^77! Z6X\_77! /0)010! ! 2&%&#*1! 849&)*99! `! 6! 6! 6_! _! ^_Y! !Z[\^77!! !Z6^\X77!! :*;*5$<%*)#! 80)=!$.! /0)010! /0)010! _! 6! 6! I! X! a7Y! !ZX\[77!U! !ZX7\777!U! :*<$9&#! ZI\X77!! ZI7\777!! >)94+0)'*! ! /$+<$+0#&$)! ! /0)010! X! 7! 6! [! ^! __Y! !ZX\I77!! !ZH\X77!! 20)19! /$%<0)-! 2&%&#*1! /0)010!?$9#! X! 6! 6! H! ^! ^^Y! !ZH\a77!U! Z6]\X77!U! /$+<$+0#&$)! Z67\_77!! Z^7\I77!

/0)01&0)!"&+! ^UI! 7! 6! 67! ^! ^7Y! !ZI\X77! !Z67\a77!! @+0)9<$+#! -*0+9! A*'4+&#-! "4#B$+&#-! /0)01&0)! I! 6! 6! 67! X! X7Y! 7! Z6X\I77!U! 8+$01'09#&),! Z6]\677! /$+<$+0#&$)! /0)01&0)! X! 6! 6! ]! 6! 6XY! ZX\777!U! Za\777!U! /$%%*+'&05! ZX\]77! ZH\X77! /$+<$+0#&$)! /0)01&0)! #$!]7! 7! 6! 6! 7! 7Y! ZX77!U! !! :0&+-! -*0+9! ZX]7! /$%%&99&$)! $51! /0)01&0)! I! 6! 7! H! _! __Y! !! !! C49*4%!.$+! D4%0)! E&,B#9! - 54 -

!"#$%&'% .DD+E% H+"FF$=$I% O% !&E% B% .))-"8% MG",=% ()*+,+-+,&)% 0$)F+G% N&"=I% A"J% :$#K$=*%% P&#$)% L&#$)%% =$+",)$=% ;$+",)$=% /0)01&0)! I! 6! 6! H! [! []Y! ZX\777!U! Za\777!U! C49*4%!$.! ZX\]77! ZH\X77! /&;&5&F0#&$)! !! /0)01&0)! X! 6! 6! H! [! []Y! Z_\[77!U! Z]\677!b!! C49*4%!$.! ZX\^77! Za\X77! 30#4+*! /0)01&0)! X! !! 7! 6H! [! _^Y! !! !! @$4+&9%! /$%%&99&$)! ! :*.*)'*! X! 6! 6! _! 6! __Y! Z_\^77!U! Z[\X77!U! /$)9#+4'#&$)! Z_\a77! Z]\I77! G6HI6J! 2&%&#*1! ()#*+<+&9*! _! 7! 6! I! _! [7Y! Z^\H77!U! !! /0<*!8+*#$)! Z_\X77! /$+<$+0#&$)! (M<$+#! X! 6! 6! 67! ^! ^7Y! !Z[\^77!! !Z6^\X77! :*;*5$<%*)#! /0)010! N0+%!/+*1&#! X! 6! 6! 66! ^! 6aY! !Z[\^77!! !Z6]\X77!! /0)010! N*1*+05! X! 6! 6! ^! 6! I7Y! Z_\^77!U! Z[\X77!U! 8+&1,*! Z_\a77! Z]\I77! /$+<$+0#&$)! 2&%&#*1! N+*9BO0#*+! X! 6! 6! a! 6! 6_Y! !! Z_\[77!U! N&9B! ZI\777! C0+=*#&),! /$+<$+0#&$)! 30#&$)05! X! 6! 6! 6X! X! ^HY! ZX\777!U! Za\777!U! /0<! ZX\]77! ZH\X77! /$%%&99&$)! 30#&$)05! X! 6! 6! H! _! __Y! Z_\[77!U! Z]\677!U! P055*+-!$.! ZX\^77! Za\X77!! /0)010! 30#&$)05! X! 7! 6! H! I! I[Y! !ZX\^77!! !Za\X77!! C49*4%!$.! A'&*)'*!0)1! @*'B)$5$,-! ! - 55 -

!"#$%&'% .DD+E% H+"FF$=$I% O% !&E% B% .))-"8% MG",=% ()*+,+-+,&)% 0$)F+G% N&"=I% A"J% :$#K$=*%% P&#$)% L&#$)%% =$+",)$=% ;$+",)$=% Q51!?$+#!$.! _! 7! 6! X! 7! 7Y! !! !! C$)#+R05! /$+<$+0#&$)! >)'L! ?0+'! X! 7! 6! ]! _! X_Y! Z_\^77!U! Z[\X77!U! :$O)9;&*O! Z_\a77! Z]\I77! ?0+=!>)'L! E$-05! X! 6! 6! a! X! I7Y! ZI\_77!U! Z67\I77!U! /0)01&0)! Z[\^77! Z6^\^77! C&)#! ! @*5*.&5%! I! 6! 6! [! _! I7Y! !! Z]\677!U! /0)010! Za\X77! ! 80)=!$.! _! 6! 6! 6^! ^! 6]Y! Z]\_77!U! /0)010! Za\[77! ! ! /0)010! X! 6! 6! ]! X! I]Y! Z[\677!U! Z6^\^77!U! C$+#,0,*! Z]\^77! Z6X\_77! 0)1!D$49&),! /$+<$+0#&$)! ! "#50)#&'! X! 7! 6! [! 6! 6]Y! Z^\[77!U! ZI\677!U! ?&5$#0,*! Z_\777! Z[\777! "4#B$+&#-! 854*!S0#*+! X! 7! 7! _! _! 677Y! !! !! 8+&1,*! "4#B$+&#-! /0)010! X! 6! 6! 67! X! X7Y! ZX\777!U! Za\777!U! /$4)'&5!.$+! ZX\]77! ZH\X77! #B*!"+#9! /0)010! X! 7! 6! [! ^! __Y! !ZI\X77!! !Z67\a77! (%<5$-%*)#! >)94+0)'*! N&)0)'&),! 8$0+1! /0)010! _! 6! 6! 67! X! X7Y! !Z^I\777!! !Z6^7\777!! ?*)9&$)!?50)! >);*9#%*)#! 8$0+1! - 56 -

!"#$%&'% .DD+E% H+"FF$=$I% O% !&E% B% .))-"8% MG",=% ()*+,+-+,&)% 0$)F+G% N&"=I% A"J% :$#K$=*%% P&#$)% L&#$)%% =$+",)$=% ;$+",)$=% /0)01&0)! X! 7! 6! ]! _! X_Y! !! ZI\]77!U! E0'*! Z[\]77! E*50#&$)9! N$4)10#&$)! N&+9#!30#&$)9! I! 6! 6! H! [! []Y! Z_\[77!U! Z]\677!U! A#0#&9#&'05! ZX\^77! Za\X77! >)9##*! P+*0#!20=*9! X! 6! 6! [! 7! 7Y! Z^\[77!U! ZI\677!U! ?&5$#0,*! Z_\777! Z[\777! "4#B$+&#-! >)#*+)0#&$)05! X! 7! 6! H! [! []Y! ZX\[77!U! ZH\^77!U! :*;*5$<%*)#! ZI\X77! Z67\!a77! E*9*0+'B! /*)#+*! ! 204+*)#&0)! X! 6! 6! [! 7! 7Y! Z^\H77!U! !! ?&5$#0,*! Z_\X77! "4#B$+&#-! C0+&)*! X! 6! 6! ]! ^! ^HY! !! Za\777!U! "#50)#&'!>)'L! ZH\X77!

30#&$)05!"+#9! X! 6! 6! H! _! __Y! V-!V-U50O! V-!V-U50O! /*)#+*! /$+<$+0#&$)! ?0'&.&'! X! 6! 6! [! ^! __Y! Z^\H77!U! ZI\]777!U! ?&5$#0,*! Z_\X77! Z[\]77! "4#B$+&#-! ???!/0)010! X! 6! 7! [! 6! 6]Y! !! !! >)'L! ! ?4V5&'!A*'#$+! X! 6! 6! H! X! XXY! .&M*1!V-U .&M*1!V-U ?*)9&$)! 50O! 50O! >);*9#%*)#! 8$0+1! E&15*-! X! 6! 6! I! 7! 7Y! Z^\H77!U! !! @*+%&)059! Z_\X77! >)'L! A#0)10+19! X! 6! 6! ]! 6! 6XY! 7! !! /$4)'&5!$.! /0)010! - 57 -

!"#$%&'% .DD+E% H+"FF$=$I% O% !&E% B% .))-"8% MG",=% ()*+,+-+,&)% 0$)F+G% N&"=I% A"J% :$#K$=*%% P&#$)% L&#$)%% =$+",)$=% ;$+",)$=% W>"!E0&5! X! 6! 6! 66! _! ^]Y! ZI\_77!U! Z67\I77!U! /0)010!>)'L! Z[\_77! Z6^\X77!

@$#05!K!@$#05! X6! __! X^! _[_! 6^[! _IY! ! ! C*#! E*T4&+*%*)#! ?*+'*)#!C*#! aHY! ]7Y! aHY! ! ! ! ! ! E*T4&+*%*)#!

Legend: Appt. length is in years unless stated otherwise 1 = Requirement met 0 = Requirement not met

58

CHAPTER 5: DISCUSSION AND CONCLUSION

In response to the Sponsorship scandal, which involved the questionable accounting practices of six Crown Corporations, the Government saw fit to implement a number of measures in order to protect against the misuse of Government funds through tighter governance controls. In Drucker’s 1954 book on the practice of management he highlighted the importance of measurement, and has been credited with the widely used expression that “what gets measured gets done.” By implementing 31 new governance measures to Crown Corporations, the Government is ensuring that good corporate governance “gets done.” An important element in this study is the definitions provided for the measures announced by the Government. Some of the measures had ambiguous meanings and this study provides a definition of the specific elements required to meet each measure.

The Sponsorship scandal raised the issue of accountability with respect to the

Boards of Crown Corporations, and a large number of measures to be implemented were intended to improve the Board’s ability to effectively exercise their accountability requirements. Clearly defined roles for the Board and Board leadership are key measures and are the first steps in ensuring accountability (Leblanc, 2005). The measures announced that require Boards to be fully involved in the management of the appointment process for new members and the CEO will ensure effective leadership and the right mix of skills on the Board, ultimately leading to effective Board accountability (Leblanc,

2005).

- 59 -

The purpose of this study was to examine the 46 Federal Crown Corporations to determine if and how many of the 31 measures the Government announced in 2005 had been implemented by 2010.

Despite the importance the Government placed on the implementation of the 31 measures, and also despite the importance of some of these measures in the field of effective corporate governance, to date many of the measures were not reported as being implemented. Because this study depended on publically available information it is possible that there is better compliance then the published information would indicate.

Nevertheless, since reporting and transparency are key components of effective corporate governance, it is reasonable to expect that Crown Corporations would report on all the measures they have implemented.

Although some measures requiring legislative change were reported as being implemented, the supporting changes could not be found in the Corporations’ enabling legislation. In addition, some legislative changes were made but the intended impact of the change was subsequently diminished. For example, several Corporations implemented a separation between the CEO and Chair positions and then allowed the

CEO to chair Board meetings if the Chair was not available. The overall effect of these contradictory legislative provisions is to diminish the independence of the Board as the

CEO retains the power and control of both the Corporation and the Board.

The measures were introduced by the Government to better control the governance of Crown corporations following a scandal which ultimately revealed criminal activity. Although the measures represent tighter regulations on the management of Crown Corporations and ensure more scrutiny by the Auditor General - 60 - through yearly financial audits as well as more frequent special examination audits, the risk of criminal activity cannot be fully eliminated. Too much power and control of the

Corporation residing in one person, increases this risk.

Research Implications

This study provides a foundation for evaluation of the corporate governance structures in Canadian Crown Corporations. By knowing which Crown Corporation implemented which measures, further research may be undertaken into the effectiveness of these measures, and the governance structures of Government institutions.

Limitations and Future Research

The strength of this study lies in its comprehensive review of the governance structures of all 46 Crown Corporations and their self-reported compliance with the thirty-one Government measures announced in 2005. Since the announcement, a review of all 46 corporations had not been done. This study looked at the legislative framework as well as the reported governance structures of all 46 Crown Corporations.

There are also a number of limitations to this research that must be taken into consideration when interpreting the results of the study. Specifically, as the compliance with a measure was determined by self-reporting publically available information, some obvious measures may not have been reported by some Corporations. For example, the appointment of the Auditor General as Auditor for all Crown Corporations is found in the legislation of the Financial Administration Act; however seven Corporations did not name the Auditor General as their external auditor. - 61 -

In addition, as only publically available information was used, certain measures could not be verified. The measures requiring the Government to provide guidance documents to new Board members, or establish review committees looking at compensation issues are two examples. Future studies could fill in the gaps in information by approaching the Government or Crown Corporations for examples of these guidance documents.

Since it is clear which measures were widely implemented, future studies could focus on the effectiveness of these measures, either by comparison with Crown

Corporations who have not implemented them or by a more in depth investigation of the impact on the governance structures of the Corporations. Future research could expand the limits of this study by opening the black box of governance in Crown Corporations to expose the actual workings of the Boards and how they have implemented the reported measures.

Current interest is being shown regarding the impact of diversity on Boards and

Board compensation. Future studies of Crown Corporations could be undertaken to address some of the anomalies alluded to in this study. The distribution of women on paid versus volunteer Crown Corporation Boards, for example, or the effectiveness of

Boards receiving substantial remuneration as compared to Boards with smaller retainers or volunteer Boards.

Conclusions

This study provides clear definitions of the elements to be measured for the governance improvements expected by the Government in Crown Corporations. It verifies that although the Government implemented the majority of the measures for - 62 - which it was responsible, the majority of the Crown Corporations still have a considerable number of measures to either implement or report on implementing in order to be in compliance with the Government’s requirements. Finally, this study sets the stage for future research to determine if the controls and measures put in place will in fact improve the governance of Crown Corporations and reduce the risks of future illegal activities as was the case in the Sponsorship program.

- 63 -

Appendix A: Data Reference Material

Access to Information Act http://laws-lois.justice.gc.ca/PDF/A-1.pdf

AG Special Examinations of Crown Corporations An Overview 2008 http://www.oag-bvg.gc.ca/internet/English/parl_oag_200805_08_e_30704.html

AG Special Examinations of Crown Corporations 2008 http://www.oag-bvg.gc.ca/internet/English/parl_oag_200905_07_e_32520.html

AG Special Examinations of Crown Corporations 2009 http://www.oag-bvg.gc.ca/internet/English/parl_oag_201004_06_e_33719.html

AG Special Examinations of Crown Corporations 2010 http://www.oag-bvg.gc.ca/internet/English/parl_oag_201106_07_e_35375.html

")!"'#!#$!*9#0V5&9B!#B*!/$+<$+0#&$)!.$+!#B*!C&#&,0#&$)!$.!C0'=*)F&*!P09!?+$c*'#!>%<0'#9! B##

Atomic Energy of Canada - Website http://www.aecl.ca/site3.aspx

Bank of Canada Act http://laws-lois.justice.gc.ca/PDF/B-2.pdf

Bank of Canada - Website http://www.bankofcanada.ca

Bill C-26 Canada Transportation Act and the Railway Safety Act, to enact the Via Rail Canada Act and to make consequential amendments to other Acts http://www.parl.gc.ca/content/hoc/Bills/372/Government/C-26/c-26_1/c-26_1.pdf

Blue Water Bridge Authority Act http://laws-lois.justice.gc.ca/PDF/B-5.5.pdf

Blue Water Bridge Authority – Website http://www.bwba.org/

Broadcasting Act http://laws-lois.justice.gc.ca/PDF/B-9.01.pdf

Business Development Bank of Canada Act - 64 - http://laws-lois.justice.gc.ca/PDF/B-9.9.pdf

Business Development Bank of Canada - Website http://www.bdc.ca/EN/about/corporate_governance/Pages/default.aspx

Canada Business Corporations Act (includes Federal Bridge Corp. Limited) http://laws-lois.justice.gc.ca/PDF/C-44.pdf

Canada Council for the Arts Act http://laws-lois.justice.gc.ca/PDF/C-2.pdf

Canada Council for the Arts – Website http://www.canadacouncil.ca/

Canada Deposit Insurance Corporation Act http://laws-lois.justice.gc.ca/PDF/C-3.pdf

Canada Deposit Insurance Corporation Auditor General’s Special Examination Report—2010 http://www.cdic.ca/multimedia/Website/Documents/pdf/en/14994_SE-R_CDIC.pdf

Canada Development Investment Corporation http://www.cdiccei.ca/english/archives.asp

/0)010!(%<5$-%*)#!>)94+0)'*!N&)0)'&),!8$0+1!"'#! %B##

Canada Gazette – Website http://www.gazette.gc.ca/index-eng.html

Canada Lands Company Limited http://www.clc.ca/home

Canada Mortgage and Housing Corporation Act http://laws.justice.gc.ca/PDF/C-7.pdf

Canada Mortgage and Housing Corporation – Website http://www.schl.ca

Canada Pension Plan Investment Board Act http://laws-lois.justice.gc.ca/PDF/C-8.3.pdf

Canada Post Act http://laws-lois.justice.gc.ca/PDF/C-10.pdf

Canada Post Governor in Council Appointments http://nominations.gc.ca/prflOrg.asp?OrgID=CPO&lang=eng - 65 -

Canada Post Strategic Review Dec. 2008 http://www.cpcstrategicreview-examenstrategiquescp.gc.ca/finalreport/pt3-eng.html

Canada Post - Website http://www.canadapost.ca/cpo/mc/languageswitcher.jsf

Canada School of Public Service – Courses for Crown Corporations http://www.csps-efpc.gc.ca/sch/index- eng.asp?SearchString=crown+corporations&goButton=Search&NavEvent=&FirstRow= &SearchZone=all&myPage=&SearchMode=allwords&searchlang=E

Canadian Air Transport Security Authority Act http://laws-lois.justice.gc.ca/PDF/C-11.2.pdf

Canadian Air Transport Security Authority Annual Report 2011 http://www.catsa.gc.ca/File/Library/104/English/CATSA_2011_AR_ENG_WEB_Final.p df

Canadian Air Transport Security Authority - Website http://www.catsa-acsta.gc.ca/home.aspx?id=1&pname=Home_Accueil&lang=en

Canadian Broadcasting Corporation – Website http://www.cbc.radio-canada.ca/history/

Canadian Commercial Corporation Act http://laws.justice.gc.ca/PDF/C-14.pdf

Canadian Commercial Corporation – Website http://www.ccc.ca/index.html

Canadian Dairy Commission Act http://laws-lois.justice.gc.ca/PDF/C-15.pdf

Canadian Dairy Commission Annual Report 2009-10 http://docs.google.com/viewer?a=v&q=cache:tsLd2CgUOegJ:www.cdc- ccl.gc.ca/CDC/userfiles/file/CDC10_web_en.pdf+canadian+dairy+commission+annual+r eport&hl=en&gl=ca&pid=bl&srcid=ADGEESjo1CL- x1ubHkyBnQ9T4VdQYNYezhgGEzVNBVhDipaiOX_t- Qr1DSU1uztSF3YFetZep1UDvI_r4ENwlJnsCzuV-LgfaESZaJaVfGl5gSs- g0D3bbYNMyagWywsaC877tqInsGk&sig=AHIEtbS_2KLkilhC6mo2NTaZcZtRVFntig

Canadian Dairy Commission – Website http://www.cdc.ca/cdc/index-eng.php

Canadian Deposit Insurance Corporation - Website - 66 - http://www.cdic.ca/e/whoisCDIC/whoisCDIC.html Canadian Employment Insurance Financing Board - Website http://www.ceifb-ofaec.ca

Canadian Museum for Human Rights – Website http://humanrightsmuseum.ca/

Canadian Museum of Civilization – Website http://www.civilization.ca/home

Canadian Museum of Nature - Website http://nature.ca/en/home

Canadian Pension Plan Investment Board – Website http://www.cppib.ca/

Canadian Race Relations Foundation Act http://laws-lois.justice.gc.ca/PDF/C-21.8.pdf

Canadian Race Relations Foundation – website http://www.crr.ca/

Canadian Science and Technology Museums Corporation http://technomuses.ca/our_corporation/index_e.asp?CaId=1&PgId=26

Canadian Tourism Commission Act http://laws-lois.justice.gc.ca/PDF/C-23.3.pdf

Canadian Tourism Annual Report 2009-10 http://en-corporate.canada.travel/sites/default/files/pdf/annual_report_2010.pdf

Canadian Tourism Commission – Website http://corporate.canada.travel/ctc-cct

Cape Breton Development Corporation Act http://laws-lois.justice.gc.ca/eng/acts/C-25/

Cape Breton Development Corporation Divestiture Authorization and Dissolution Act http://laws-lois.justice.gc.ca/eng/acts/C-25.2/

CHARTER OF THE BOARDS OF DIRECTORS OF CANADA LANDS COMPANY LIMITED AND CANADA LANDS COMPANY CLC LIMITED http://www.clcl.ca/en/pdf/charter.pdf

Defence Construction Canada – Website - 67 - http://www.dcc-cdc.gc.ca/english/index.html

Defence Production Act http://laws-lois.justice.gc.ca/PDF/D-1.pdf

Enterprise Cape Breton Corporation Act http://laws.justice.gc.ca/PDF/E-9.5.pdf

Enterprise Cape Breton – Plans and Priorities on ACOA site http://www.acoa-apeca.gc.ca/eng/publications/ParliamentaryReports/Pages/RPP_2009- 2010_4.aspx

Enterprise Cape Breton - Website http://www.ecbc-secb.gc.ca/English/aboutecbc/Pages/BoardofDirectors.aspx

Environment Canada – Backgrounder – MacKenzie Gas Project http://www.ec.gc.ca/bpgm-mgpo/default.asp?lang=En&n=E7B58855-1

Export Development Act http://lois.justice.gc.ca/PDF/E-20.pdf

Export Development Canada – Website http://www.edc.ca/english/publications_15055.htm?kw=Export_Development_Corporati on

Farm Credit Canada Act http://laws-lois.justice.gc.ca/PDF/F-2.2.pdf

Farm Credit Canada – Website http://www.fcc-fac.ca/en/index.asp

Federal Bridge Corporation Limited – AG 2008 Special Examination Report http://www.federalbridge.ca/Portals/0/projects_docs/AG%20Report%202008.pdf

First Nations Financial Management Board http://www.fnfmb.com/

First Nations Fiscal and Statistical Management Act http://www.laws.justice.gc.ca/PDF/F-11.67.pdf

First Nations Statistical Institute – Website http://www.fnsi-ispn.com/

Freshwater Fish Marketing Act http://laws-lois.justice.gc.ca/PDF/F-13.pdf

- 68 -

Freshwater Fish Marketing Corporation – Annual Report http://publications.gc.ca/collections/collection_2010/ocped-ffmc/CC191-2010-eng.pdf

Freshwater Fish Corporation Board Profile http://www.appointments.gc.ca/boardProfileOrg.asp?OrgID=FFM&type-typ=&lang=eng

Freshwater Fish Marketing Corporation – Website http://www.freshwaterfish.com/

Governor in Council Appointments – website (where advertisements for board vacancies are published) http://www.appointments-nominations.gc.ca/

Great Lakes Pilotage Authority - Website http://www.glpa-apgl.com

International Development Research Centre Act http://laws-lois.justice.gc.ca/PDF/I-19.pdf

International Development Research Centre – Website http://www.idrc.ca/EN/Pages/default.aspx

Laurentian Pilotage Authority http://www.pilotagestlaurent.gc.ca/homePage_e.asp

Marine Atlantic Inc. Acquisition Authorization Act http://laws-lois.justice.gc.ca/PDF/M-0.58.pdf

Marine Atlantic Inc. -Website http://www.marine-atlantic.ca

Museums Act http://laws-lois.justice.gc.ca/PDF/M-13.4.pdf

National Arts Centre Corporation Act http://www.canlii.org/en/ca/laws/stat/rsc-1985-c-n-3/latest/rsc-1985-c-n-3.html

National Arts Centre – Website http://www2.nac-cna.ca/en/

National Capital Act http://laws-lois.justice.gc.ca/PDF/N-4.pdf

National Capital Commission - Website http://www.canadascapital.gc.ca - 69 -

National Energy Board - Website http://www.neb-one.gc.ca/clf-nsi/index.html

National Gallery of Canada -Website http://www.gallery.ca

National Museum of Science and Technology – Website http://www.technomuses.ca

Nuclear Energy Act http://laws-lois.justice.gc.ca/eng/acts/A-16/

Old Port of Montreal Corporation Inc. – Website http://www.oldportcorporation.com/home.html

Parc Downsview Park Incorporated – Website http://www.downsviewpark.ca/

Pilotage Act http://laws.justice.gc.ca/PDF/P-14.pdf

Port of Montreal – Website http://www.port-montreal.com/

Privacy Act http://laws-lois.justice.gc.ca/PDF/P-21.pdf

Project – MacKenzie Valley Natural Gas Pipeline Route Project http://www.mackenziegasproject.com/theProject/index.html

Public Private Partnerships (PPP) Canada Incorporated – Website http://www.p3canada.ca/home.php

Public Sector Pension Investment Board Act http://laws-lois.justice.gc.ca/PDF/P-31.7.pdf

Public Sector Pension Investment Board – Website http://www.investpsp.ca/

Ridley Terminals Incorporated– Website http://www.rti.ca/

Royal Canadian Mint Act http://laws-lois.justice.gc.ca/PDF/R-9.pdf

- 70 -

Royal Canadian Mint – Website http://www.mint.ca/

Standards Council of Canada Act http://laws-lois.justice.gc.ca/PDF/S-16.pdf

Standards Council of Canada - Website http://www.scc.ca/

Telefilm Canada Act http://laws-lois.justice.gc.ca/PDF/C-16.pdf

Telefilm Canada – Website http://www.telefilm.gc.ca/en/?q=en

The Federal Bridge Corporation – Website http://www.federalbridge.ca/

The Legislative Review of Export Development Canada http://www.international.gc.ca/commerce/assets/pdfs/edc-eng.pdf

Treasury Board Standard on Quarterly Financial Reports for Crown Corporations http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=18789§ion=text

VIA Rail – Website http://www.viarail.ca/en/main

VIA Rail Canada Incorporated Act (shorter version clause 67 only from Bill C- 26) http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=2331379&Language= e&Mode=1&File=136 - 71 -

Appendix B: Website Copyright or Intellectual Property Permissions

Many websites used in this study had usage statements specifying their copyright protections. Some clearly stated all data and information was intended for public use and could be reproduced and used, some that the information could be used for personal purposes, some for personal or academic purposes and some stated that the information could not be used or reproduced without permission. Below is a chart of the Crown Corporation, if they appeared to have usage restrictions and confirmation of permission received or not needed to use the material from the sites. All sites that stated information could not be used without permission or for personal use only were contacted to ensure the information could be used for this study. These sites are indicated as “verification required.”

Crown Corporations – Agent Status

Name of Institution Permission Required & Permission Obtained Requested Atomic Energy of Canada Verification required, called Yes, voice-mail Oct. 26, Limited Oct. 24, 2011 2011 Business Development Bank of Not required Not required Canada Canada Deposit Insurance Not required Not required Corporation Canada Lands Company Verification required, called Yes, voice-mail Nov. 2, Limited Oct. 24, 2011 2011 Canada Post Corporation Verification required, called… Waiting Canadian Air Transport Security Not required Not required Authority Canadian Broadcasting Not required – no restrictions Not required Corporation posted on site Canadian Commercial Not required Not required Corporation Canadian Dairy Commission Not required Not required Canadian Museum for Human Required, e-mail permission Yes, by return e-mail Nov. Rights request Oct. 24 2011 3, 2011 Canadian Museum of Not required Not required Civilization Canadian Museum of Nature Verification required, called Yes, by phone Oct. 24, 2011 Canadian Tourism Commission Not required – no restrictions Not required posted on website Defence Construction (1951) Not required Not required Limited

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Name of Institution Permission Required & Permission Obtained Requested Enterprise Cape Breton Not required – no restrictions Not required Corporation posted on website Export Development Canada Required, called Nov. 2, 2011 Yes, Communications confirmed permission Farm Credit Canada Verification required, called Yes, Communications Oct. 24, 2011 confirmed Federal Bridge Corporation Not required – no restrictions Not required Limited, The posted on website Freshwater Fish Marketing Not required – no restrictions Not required Corporation posted on website National Capital Commission Not required Not required National Gallery of Canada Not required Not required National Museum of Science Not required – no restrictions Not required and Technology posted on website Old Port of Montréal Not required – no restrictions Not required Corporation Inc. posted on website Parc Downsview Park Inc. Not required – no restrictions Not required posted on website Royal Canadian Mint Yes, Oct. 24, 2011, Faxed Yes, e-mail received Oct. completed permission form 26, 2011 Telefilm Canada Not required Not required

Crown Corporations with Partial Agent Status Name of Institution Permission Required & Permission Obtained Requested Bank of Canada Not required Not required Canada Mortgage and Verification required, called Yes, voice-mail Nov. 10, Housing Corporation Library Nov. 2, 2011 2011

Crown Corporations with Non-Agent Status Name of Institution Permission Required & Permission Obtained Requested Atlantic Pilotage Authority Not required – no restrictions Not required posted on website Blue Water Bridge Authority Not required Not required Canada Council for the Arts Not required Not required Canada Employment Not required – no restrictions Not required Insurance Financing Board posted on website Canada Pension Plan Not required – no restrictions Not required Investment Board posted on website - 73 -

Name of Institution Permission Required & Permission Obtained Requested Canadian Race Relations Not required Not required Foundation Corporation for the Not required – no restrictions Not required Mitigation of Mackenzie Gas posted on website Project Impacts First Nations Statistical Not required – no restrictions Not required Institute posted on website Great Lakes Pilotage Not required Not required Authority International Development Not required Not required Research Centre Laurentian Pilotage Not required Not required Authority Marine Atlantic Inc. Not required Not required National Arts Centre Required, called Nov. 2, 2011 Yes, voice-mail Nov. 3, Corporation 2011 Pacific Pilotage Authority Not required – no restrictions Not required posted on website PPP Canada Inc. Not required – no restrictions Not required posted on website Public Sector Pension Not required Not required Investment Board Ridley Terminals Inc. Not required – no restrictions Not required posted on website Standards Council of Canada Required, e-mail request sent Yes, e-mail received Nov. 2, 2011 Nov. 9, 2011 VIA Rail Canada Inc. Not required – no restrictions Not required posted on website

Other Government Institutions Name of Institution Permission Required Treasury Board of Canada Secretariat No Office of the Auditor General Of Canada No Department of Justice No Governor in Council Appointments No Canada Gazette No

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Appendix C: Measures Data Dictionary

Below are the 31 Measures announced by the Government that were to be implemented by Crown Corporations and the word phrases or concepts searched for to determine if the Corporations met or did not meet the measure.

Measure defined by Treasury Board Word and phrase definitions required to meet the Measure All Measures - If Measure is referred to, it has been met - If Measure has multiple parts, all parts must be referred to or demonstrated for the Measure to be met - Annex A shows highlights for key words, phrases or concepts required to meet the Measure A1 Measure #1 - Powers of the Minister defined The Government will clarify the - Appointment by the Minister accountability structure for Crown specified Corporations, including in the FAA, in - Orders and Directives by the order to describe the relationships between Minister to the corporation Parliament, the responsible Minister, the - Chairperson presides at meetings Board of Directors and the CEO. - CEO is under the direction of the Board - CEO has control and direction of the corporation A2 Measure #2 - Corporation is ultimately The Government will affirm, including responsible, through the Minister, through amendments to the FAA and other to Parliament for the conduct of its relevant statutes, that the responsible affairs Minister is its representative. - Report submission regulations including submitting report of Parliament by Minister - Shares issued to the Minister`

A3 Measure #3 - Mention of a statement of priorities To improve the communication of policy and accountabilities from the objectives and priorities from the Minister Government to Crown Corporations, the - Copy of the statement responsible Minister will issue a statement of priorities and accountabilities to Crown Corporations within his or her portfolio. The statement will be discussed - 75 - beforehand with corporate management and the Board, but ultimately it will reflect the Government’s policy expectations for the Corporation. The statement will be subject to an annual review and help form the basis for a periodic review of the corporation’s performance. A4 Measure #4 - Make bi-laws to regulate the affairs In order to reaffirm that Boards of of the corporation. Directors are accountable for the activities - Director is responsible to the Board and performance of the corporation to the - Affairs of the business of the responsible Minister, the Government will Commission shall be managed by a embody the role and the responsibilities Board of Directors. of directors in Part Ten of the FAA and in - Chairperson shall determine the other enabling statutes. time and places where the Board shall meet. - Chair must preside at meetings - CEO and has supervision over employees - Establishing an Executive committee and/or other committees and their roles - Diligence of directors - Appoint CEO B5 Measure #5 - Statements that public servants are The Government will review the specifically barred from sitting on appointment of public servants as directors the board on the Boards of Crown Corporations with - Statements that the number of a view to restricting or eliminating their public servants on the Board has participation. The Government will take been reduced administrative action, and where necessary seek legislative changes, to implement this measure.

B6 Measure #6 Measure is not met if provision is made to The Government will enact the legislative separate Chair and President or CEO, and changes required to ensure a split in the then a provision is made for President or positions of CEO and chair of the Board CEO to act as Chair in Chair's absence. for Crown corporations. B7 Measure #7 Any statement specifying CEO providing a The Government will require that the CEO link to Board or as the person to submit be the sole representative of management plans, recommended policies or realization to a Board of Directors. of strategic choices to the Board.

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B8 Measure #8 - Annual meetings held To ensure that the Board may deliberate - Since outreach activities “are freely, and exercise the challenge function encouraged”, this was not required expected of directors, Board proceedings to meet this measure. should remain confidential. The - Data was captured for outreach Government will require that Boards of activities separately which were Directors of Crown Corporations hold defined as additional public annual public meetings at which meetings, stakeholder consultations stakeholders could express their views and or educational activities. seek information about the activities of the corporations.

Corporations are also encouraged to develop outreach activities to solicit input and feedback from stakeholders on an ongoing basis.

C9 Measure #9 - Guidance letter to directors To assist the work of Board members, the - Include responsibilities Government will issue to every new - Include values and ethics director, upon appointment, a guidance letter that would make explicit the expectations of the Government with regard to the role and responsibilities of directors under law and in practice. The letter would also include provisions related to the values and ethics of public office holders and disclosure of conflict of interest. C10 Measure #10 - Board charter was published To strengthen the corporate governance of - By-laws included definition of roles Crown Corporations, the Government will and responsibilities of the Board work with Boards to adopt a charter that - Committee charters were published would define clearly the roles and with roles and responsibilities responsibilities of the Board.

C11 Measure #11 - Program for corporate governance To further enhance the skills and in Canada School of Public Service performance of Boards of Directors and curriculum building on current orientation programs, the Canada School of Public Service will establish additional training and professional development programs on public sector management and Crown - 77 -

Corporations.

C12 Measure #12 - Assessment of the Board’s Consistent with good governance effectiveness completed regularly practices, the Government will ask Boards of Directors to establish regular assessments of their effectiveness and the contribution of individual directors as a self-development tool. The assessment of the Board as a whole will be communicated by the Chair of the Board to the appropriate Minister.

D13 Measure #13 - Audit committee established The Government will require that Boards - Minimum of three members of Directors for all Crown Corporations - Audit plan adopted establish an audit committee.

• @B*!'$%%&##**!O$451!'$)9&9#!$.!0! %&)&%4%!$.!#B+**!%*%V*+9!0)1! O$451!B0;*!#B*!04#B$+&#-!#$! *),0,*!&)1*<*)1*)#!'$4)9*5!0)1! *M<*+#&9*\!09!&#!1**%9!)*'*990+-\! #$!'0++-!$4#! !14#&*9L!

• @B*!%0)10#*!$.!#B*!'$%%&##**! 9B$451!&)'541*!#B*!+*T4&+*%*)#!#$! 9*#!4

• @B*!041&#!'$%%&##**!O$451!059$! 01$<#!0)!041&#!<50)!#B0#!O$451!V*! '$%%4)&'0#*1!#$!#B*!8$0+1!$.! :&+*'#$+9L!

D14 Measure #14 - Audit committee member All directors on the audit committee must independent of management be independent of management and have - Audit committee members have financial literacy. An individual with financial literacy financial expertise must chair the activities - 78 - of the committee. The Government will be mindful of this requirement in the context of the selection and appointment process of directors.

D15 Measure #15 - Statement that internal & external In order to enhance and protect the auditors report directly to the audit independence of the audit function, committee internal and external auditors will report directly to the audit committee.

E16 Measure #16 Government has a website for soliciting Selection criteria for chairs and Board Board Members, therefore part 1 met for all profiles will be made public by the Crown Corporations, unless specifically Government. Similarly, Crown exempt in Crown corporations Corporations will make CEO selection documentation. To meet Measure, board criteria available to the public. profiles must be mentioned in reports or on websites.

E 17 Measure # 17 - Central website for Board vacancies The Government will develop a central found Web site to solicit potential candidates for director and chair positions. E18 Measure #18 - CEO selection process determined The selection process for the CEO will be by the Board determined by the Board of Directors and - Board is responsible for the CEO will include, at minimum, advertising in selection either or both the Canada Gazette and the Corporation’s Web site.

E19 Measure #19 - Statements that references for The Government will obtain references on appointments to Boards are obtained all candidates for appointment as director - Statements that nominating or chair. In the case of CEOs, the Board’s committees will obtain references nominating committee will be required to - Government will conduct do the same for any candidate it submits to background checks the Government for appointment. In addition, the Government will continue to conduct background checks and ensure that candidates are not in a conflict of interest, prior to making any appointment. E20 Measure #20 - Appointment review process in The Government will work closely with place to ensure timely filling of parliamentary committees to ensure a vacancies workable appointment review process that will not unduly delay necessary - 79 - appointments.

E21 Measure #21 - Statement that appointments would The Government will amend the FAA and be for up to 4 years enabling statutes to provide for appointments for up to four years. F22 Measure #22 - P4&10)'*!1$'4%*)#!O&#B!9<*'&.&'0#&$)9! To respond to the public interest in non- .$+!1&9'499&$)!0)1!0)05-9&9!9*'#&$)!0)1! financial issues, the Treasury Board of &994*9!<*+#0&)&),!;054*9!0)1!*#B&'9! Canada Secretariat will produce a guidance document for Crown Corporations on annual report specifications, including the Management’s Discussion and Analysis Section and issues pertaining to values and ethics. F23 Measure #23 - Appropriations are stated in annual In order to make the financing of Crown or financial reports Corporations more transparent, the - Appropriations are stated in Government will also ensure that the Main corporate plans Estimates document clearly identifies the funds allocated to each Crown corporation that receives parliamentary appropriations. G24 Measure #24 - Government develops a certification In principle, the Government supports the regime use of a certification regime adapted to the - Certification results are mentioned reality of public institutions. The Treasury Board of Canada Secretariat will examine, in consultation with Crown Corporations, the development of a certification regime that would be applicable to all Crown Corporations. F25 Measure #25 ATI Act amended to include: Canadian The Access to Information Act should Development Investment Corporation, Canadian Race Relations Foundation, Cape Breton Development Corporation, Cape Breton Growth Fund • V*!*M#*)1*1!#$!67!$.!#B*!*M&9#&),! Corporation, Enterprise Cape Breton, Marine Atlantic 6a!/+$O)!/$+<$+0#&$)9_!'4++*)#5-! Inc., Old Port of Montreal, Parc Downsview Park, Queens Quay West Land Corporation, and Ridley $4#9&1*!#B*!<+$;&9&$)9!$.!#B*!"'#! Terminal Inc. V-!0)!Q+1*+!&)!/$4)'&5f!

3 These are: Canadian Development Investment Corporation, Canadian Race Relations Foundation, Cape Breton Development Corporation, Cape Breton Growth Fund Corporation, Enterprise Cape Breton, Marine Atlantic Inc., Old Port of Montreal, Parc Downsview Park, Queens Quay West Land Corporation, and Ridley Terminal Inc. - 80 -

• )$#!&)'541*!9*;*)!/+$O)! /$+<$+0#&$)9X!4)#&5!#B*! ATI Act does not include: VIA Rail, National P$;*+)%*)#!B09!1*;*5$<*1! Arts Centre, Canadian Broadcasting Corporation, Export Development Canada, Canada Post %*'B0)&9%9!#$!<+$#*'#!#B*&+! Corporation, Atomic Energy of Canada Limited and '$%%*+'&055-!9*)9&#&;*! the Public Sector Pension Investment Board

&).$+%0#&$)f! ATI Act excludes the Canada Pension Plan • )$#!&)'541*!#B*!/0)010!?*)9&$)! Investment Board ?50)!>);*9#%*)#!8$0+1!0#!#B&9!#&%*! V*'049*!$.! !.*1*+05U<+$;&)'&05! 9#+4'#4+*L!>#9!&)'549&$)!O&55!+*T4&+*! <+$;&)'&05!'$)9*)#f! ATI Act includes protection for journalistic • V*!0%*)1*1!#$!&)'541*!<+$#*'#&$)! sources .$+!c$4+)05&9#&'!9$4+'*9L!

D26 Measure #26 Statement that the Auditor General is the The Government will amend the relevant auditor for the corporation legislation in order to allow for the appointment of the Auditor General of Inferred if Auditor General Special Canada as the external auditor or joint Examination has been completed since auditor for all Crown Corporations, inside 2005 for the Crown Corporation, even if the or outside the purview of Part Ten, Auditor General is not specified in the Divisions I through IV, of the FAA. In enabling Act for the corporation or in the recognition of the specific needs of annual reports. commercial Crown Corporations, and in line with current practice with regard to several organizations, the Government would encourage the Auditor General of Canada to work in partnership with private sector auditing firms.

F27 Measure #27 Statement that Auditor General has the The Government will implement the authority to conduct special examination necessary legislative changes to provide the Office of the Auditor General of If Auditor General Special Examination Canada with the authority to conduct exists after 2005, Measure has been met. special examinations in all Crown Corporations.

4 These are: Via Rail, National Arts Centre, Canadian Broadcasting Corporation, Export Development Canada, Canada Post Corporation, Atomic Energy of Canada Limited and the Public Sector Pension Investment Board.

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F28 Measure #28 - Special Examinations every 8 years The Government will establish a more flexible system for the timing of special examinations, reflective of the level of risk related to each Corporation. The risk analysis would be based on the complexity of the organization, the field of operation, and the changes taking place in the business and policy environment that may impact on the corporation. The Office of the Auditor General of Canada would have the responsibility for determining the frequency of special examinations for each Crown Corporation. At a minimum, all Corporations would undergo a special examination every eight years. F29 Measure #29 - Special Examination reports The Government will require that each submitted to: Board, Minister, special examination report prepared by the Treasury Board, Parliament Auditor General be submitted to the Board of Directors, the responsible Minister, the Treasury Board, and Parliament, to maximize the value of these reports to Canadians. In accordance with the provisions of the FAA to protect commercial interests of a parent Crown Corporation or a wholly-owned subsidiary of a parent Crown Corporation, the Government will work with the Office of the Auditor General of Canada to develop a protocol relating to the release of the special examination. G30 Measure #30 - Advisory Committee on Senior The government will ask the Advisory Level Retention and Compensation Committee on Senior Level Retention and report on review of compensation Compensation to review the compensation provided to chairs and directors of provided to chairs and directors of Crown Crown Corporations. corporations. G31 Measure #31 - FAA allows for an advance of costs The Government intends to develop to directors. regulations pursuant to the FAA to provide for an advance of costs to directors in much the same manner as in the Canada Business Corporation Act.

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