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Source: Toronto Star

Posted on February 15, 2005

      Sensitive government information is vulnerable to computer hackers, and billions of taxpayer dollars are squirreled away in federal foundations without public scrutiny, says the auditor general.

      Sheila Fraser's latest report today is a tale of troubling possibilities rather than a blockbuster scandal.

      But the woman who blew the lid off the sponsorship imbroglio a year ago has nonetheless put Prime Minister Paul Martin's Liberal minority on notice that potentially more-damaging problems lie buried in the government's machinery.

      A year ago, Martin chose to call a judicial inquiry to get to the bottom of the $250-million sponsorship program after Fraser published a series of damning indictments of its management.

      Now, she has re-issued a warning about Ottawa's penchant for plowing year-end surpluses into arms-length foundations. Those foundations, such as the $2.5-billion Millennium Scholarship Foundation and the $3.6-billion Foundation for Innovation, are shielded from parliamentary and public scrutiny.

      With $7.7 billion out of public view in foundation coffers - and rumours of new such projects being launched in next Wednesday's federal budget - the Liberal government hasn't made good on promises from the last two years to improve the transparency of foundations.

      "Given the significant sums involved, I am concerned about the lack of adequate accountability to Parliament," said Fraser.

      In simple terms, the various foundations could harbour the kinds of contracting irregularities, insider back-scratching and lack of value for money that bedevilled the sponsorship program.

      Fraser told a news conference she's not suggesting any such problems exist, but added she's "not convinced" such behaviour would ever come to light in the absence of public audits.

      "We have absolutely no access to foundations," she said.

      "...the mechanisms are not there (to check) and we really believe that the office of the auditor general, as Parliament's auditor, should have access to these foundations."

      Also troubling, the federal government isn't even meeting "it's own minimum standards" for information technology security, Fraser said, two years after she first warned of the danger.

      "If you go out at night and leave your back door wide open, nobody may come in that night," said Fraser.

      "But if you consistently leave it open ..."

      Fraser said hacker access to personal information is just one fear.

      "If you can shut down systems, you can do a lot of havoc ... The government is vulnerable presently to attacks."

      Fraser also emphasized today that the government has made "unsatisfactory progress" in improving the governance of Crown corporations, some of which were involved in questionable sponsorship deals.

      The sponsorship inquiry is set to begin its second stage later this month in Montreal, where Justice John Gomery will attempt to follow the money trail through a series of federally contracted ad agencies.

      Among Fraser's comments on the Crown corporations:

      - It took more than three years for Ottawa to start addressing recommendations about Crown corporations made in a 2000 audit.

      - It takes too long to appoint Crown corporation board members and CEOs. Four Crowns don't have a permanent CEO and in the 15 largest, more than a third of board members' terms have expired.

      - There is no formal mechanism for communicating government expectations to Crown corporations.

      Small measures have been taken since Fraser first raised her concerns more than four years ago, well before suspect involvement by Canada Post and the Business Development Bank of Canada in the sponsorship program became public knowledge.

      Fraser noted those small improvements don't keep pace with the public appetite for reforms in the wake of celebrated business scandals such as Enron, Nortel and WorldCom.

      "Recent developments in the private sector have raised the bar for corporate governance, and this will require much more attention," she said.

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