Auditor general’s office discovers employees earning side money off undisclosed government contracts

Canada’s auditor general recently fired and called in police to investigate two employees who had been privately earning money from government contracts they had not declared.

In a statement to National Post this week, the Office of the Auditor General (OAG) said it is still investigating a third employee that it also discovered had contracts with another arm of the federal government the employee had not disclosed to their employer.

The firings, which occurred between September and December last year, come to light as questions swirl about how a federal public servant’s company was able to obtain a nearly $8-million contract to work on the Arrivecan app.

It also indicates that no federal organization — including the biggest watchdog of government contracting who recently published a scathing report on Arrivecan — is immune from employees breaking the code of conduct, and potentially the law, by failing to report all secondary employment, particularly government contracts.

Ian Stedman, a York University assistant professor specializing in ethics in government, said it’s time for the government to start being more proactive in checking if public servants are respecting their employment codes, instead of relying on attestations signed by each bureaucrat.

For example, he said each department and agency could have a team whose job is to randomly pick certain public servants to be “audited,” which could include a review of their expense reports and verifying that they don’t have undeclared secondary sources of income.

“Because our work dynamics and our work cultures have shifted so much (since the pandemic), we probably have to have a layer of oversight and auditing enforcement to continue to reinforce that the rules matter, and that they have consequences,” Stedman said.

Testifying as part of the House Public Accounts committee’s study on the Arrivecan controversy, Auditor General Karen Hogan said last week her office had not detected that David Yeo, the CEO of a consulting firm that received $7.9 million in contracts for Arrivecan, now worked for the Department of National Defence, because the latter was not part of the audit.

She noted that it is “essential” for public servants to disclose any secondary source of income to their managers so they can assess whether there is a conflict of interest, but that doesn’t always happen.

That’s when she first revealed that her office had recently discovered “incidents where disclosure did not happen” among its own employees.

In a series of detailed statements to National Post, OAG spokesperson Natasha Leduc said the office recently discovered that three of its employees had undeclared contracts with the Government of Canada. Two have since been fired while the third is still under internal investigation.

Leduc said the OAG first discovered the two fired employees had government contracts in June 2023 from Public Services and Procurement Canada (PSPC).

In one case, it was when PSPC asked the OAG if the employee of a company it was investigating still worked for the auditor general.

She said the OAG became suspicious of a second, newly hired employee when PSPC did not transfer the individual’s security clearance because it had been suspended.