AIF - Agence intergouvernementale de la Francophonie
CEA - Canadian Executing Agency
CIDA - Canadian International Development Agency
DFAIT - Department of Foreign Affairs and International Trade
IMF - Francophonie Affairs Division
MLC - Lebanese Ministry of Cultural and Educational Affairs
MOU - Memorandum of Understanding
ODA - Official Development Assistance
OIF - International Organisation of the Francophonie
RMAF - Results-based Management and Accountability Framework
SIE - Evaluation Division
SIV - Audit Division
TBS - Treasury Board Secretariat
The Canadian government provides support to the Francophonie Summits when they are held in developing countries, along with other major contributors. Without this support, these countries could not play an active role in this highly important forum. The most recent Francophone Summit was held in Beirut, Lebanon. The Summit was initially planned for October 26-28, 2001, but as a result of the events of September 11, 2001, it was postponed to October 18-20, 2002.
SIX undertook a joint evaluation and audit (herein referred to as the review) of the contribution of the Department of Foreign Affairs and International Trade in support of the organization of the Francophone Summit in Lebanon.
The review found:
Notwithstanding the success of the Summit, the Francophonie Division (IMF) lacked an appropriate management control framework to ensure that DFAIT's funding was used as intended. It is now clear that the six month time-frame between the signing (i.e. April 2001) of the MOU and the planned date (i.e. October 2001) of the event, did not provide sufficient time for the implementation of appropriate administrative and contracting procedures, given the inherent risks associated with the event.
The review found:
In response to a request during a State visit by the Lebanese Prime Minister in April 2001, the Canadian government agreed to provide a total of $4,000,000 in support of the organization of the Francophone Summit , which was scheduled to take place less than six months later, in October 2001. The Government of the Republic of Lebanon was identified as the recipient in the Treasury Board Decision. The events of September 11th led to the postponement of the Summit from October 2001 to October 2002. A second contribution was approved by the Treasury Board, which extended the program to March 31, 2003 and provided an additional $250,000.
The Summit, which consists of the Heads of State and Government of the countries that have French as a shared language, is the supreme authority of La Francophonie. It is held every two years and is chaired by the host government's Head of State who retains chairmanship until the next Summit.
This forum is an opportunity for dialogue and cooperation in which the major orientations and objectives of La Francophonie are defined in order to ensure its growth.
To give a voice to less affluent countries, the major contributors of La Francophonie, and particularly Canada, contribute financially to the physical organization of the Summits when they are held in developing countries. In these cases (Senegal, Mauritius, Benin, Vietnam), the signatory of the MOU with the host country is usually CIDA. This accountability link can be explained by the fact that 90% of the Canadian budget allotted to international Francophonie comes from the Official Development Assistance (ODA)(1) program which is managed by CIDA.
Since the Dakar Summit, Canada's contribution to the host developing countries of these Summits has consisted of goods and technical assistance in fields where Canada has a comparative advantage, including accreditation, coordination, security and health.
During the Beirut Summit, Canada contributed to six areas of intervention: accreditation, informatics, coordination centre, health, security and cultural activities.(2)
The contributions for organizing previous Summits held in developing countries were managed by the Canadian International Development Agency (CIDA) who was also the signatory of the MOU with the host country. In this case, due to the very short time frame before the Summit, it was decided that DFAIT would assume the responsibility to sign the MOU and manage the contribution.
The scope of the review included the operation of the Francophonie Affairs Division (IMF), which is the administrative unit responsible for coordinating and managing Canadian participation in the International Francophonie for DFAIT. IMF directs:
The review focussed on the Summit's outputs and outcomes and IMF's practices and controls as they relate to managing its contribution program in accordance with Treasury Board and Departmental Transfer Payment Policies.
The objectives of the review were to:
The review examined the major business processes and key controls associated with DFAIT's financial support of the organization of the Francophone Summit in Beirut, Lebanon. A comprehensive review of all relevant program documentation was carried out and key personnel in IMF, the Area Management Office (IAM), and Financial Services (SMFH) were interviewed. Outside DFAIT headquarters, the CEA and staff at CIDA and the Canadian Embassy in Beirut were interviewed.
The limited number of individuals interviewed was a major constraint in carrying out the review. The delivery of outputs, within the prescribed time limits, their suitability, use and effective functioning, as well as the intermediate results (i.e. the summary of security conditions) could only be documented through discussions with employees of DFAIT, CIDA and the Canadian Embassy in Beirut.
Efforts to contact the Lebanon authorities and delegates from other countries proved difficult, if not impossible. Lebanese officials initially assigned to organize the Summit in October 2001, had other responsibilities when the Summit was finally held in October 2002. However, despite the small number of interviews carried out, the Review Team was able to thoroughly document the Project implementation process.
In the winter of 2001, CIDA transferred $3,875,000 to DFAIT's resource base. DFAIT became accountable for the Canadian contribution to the Beirut Summit. Representatives from IMF, and the company that would ultimately be awarded the execution contract for the Summit, travelled to Lebanon in January 2001 to undertake a needs assessment. For this purpose, the company was awarded a contract by IMF in the amount of $20,000.
In the MOU signed on April 30, 2001 between the Government of Canada (represented by DFAIT) and the Government of Lebanon (represented by the Ministère libanais de la Culture [MLC]), it was stipulated that Canada's contribution to the Beirut Summit must not exceed $4,000,000. The funds covered the following six areas of intervention:
The MOU included certain specific features such as the requirement for most of the procurement to occur in Canada. Responsibility for selecting an executing agency was assigned to the Lebanese government. However, in previous summits funded by CIDA, the executing agency was contracted directly with CIDA and not by the recipient country.
The MOU for the Beirut Summit was based on a triangulation of relations. The Lebanese government was responsible for selecting the CEA, supervising its execution of the Project, approving its three invoices and recommending payment to the designated officials at DFAIT, i.e. IMF.
The MOU also stipulated that DFAIT would make three payments to the CEA: first payment: $2,208,000 on August 1, 2001; second payment: $1,177,600 on September 23, 2001; and third payment: $294,400 on October 20, 2001.
In May 2001, a feasability study that was worth $120,000, was carried out by the same company that undertook the needs assessment in January 2001.
In the amendment to the MOU signed in August 2001, the financial allocation of the funding was set out as follows:
In the Annex to the Amendment (Annex 3, Records, page 2), the general provisions state that "the Recipient will maintain relevant accounts and records of the cost of the work and of the expenditures or commitments it incurs, and in particular invoices, receipts and vouchers, which may be audited or inspected at any reasonable time by the authorized representatives of DFAIT, who may make copies or extracts of them."
The RMAF sets out the roles and responsibilities of the partners involved. It states that "the Government of Canada will make direct payments to the CEA on submission of invoices and vouchers by the Lebanese government". This provision was designed to reduce the government's exposure to financial risks. In fact, the RMAF states that "Canadian experience of financial management through other countries has not always been encouraging."
The Risk-based Audit Framework (RBAF) for Contributions for the organization of the Beirut Summit - a framework that was also an integral part of the TBS submission - states that a right to audit is included in the MOU between the Canadian and Lebanese governments. It also stipulates that "CEAs are required to provide evidence that the funds were used prudently. The documents required include evidence of the supply of goods and services under conditions of competition, purchase orders, invoices and signed manifests indicating receipt and acceptance of the goods by Lebanese officials."
On June 7, 2001, a restricted request for proposals for the services of a CEA was issued by the Lebanese government to the following three companies: Savard, Massé et associés, Gervais, Gagnon, Covington et associés, and Leroux et associés. It should be noted that these three companies have been very involved in organizing events for La Francophonie (summits and games) for more than fifteen years. The request for proposals consisted essentially of items identified in the feasibility study of May 2001, for which a quotation was requested in Canadian dollars.
On June 15, 2001, two companies were selected but one of them withdrew officially in July 2001. The company that was finally awarded the contract began work on June 11, 2001, prior to the scheduled cut-off date of the tender call period (June 15, 2001).
The execution contract was for $3,680,000, payable in three payments. The first contract was concluded on June 25, 2001 while the amendment took place on August 3, 2001 after the withdrawal of one of the two selected CEAs.
The amount of $3,680,000 did not include the cost of the feasibility study that had been completed(3) by the CEA. The cost ($120,000) of the feasibility study, once added to the lump sum value ($3,680,000) of the execution contract, resulted in total payments to the CEA in the amount of $3,800,000.
In August 2001 a submission was made to the TBS for the approval of $4,000,000 as the Canadian contribution to the Beirut Summit. However, the MOU with Lebanon was signed in April 2001 and the contract with the CEA in June 2001.
On October 8, 2001, following the events of September 11, 2001, the decision was made to postpone the Beirut Summit. By that time, all the goods and equipment for the Project were in Lebanon, however, activities such as installation of accreditation booths and training were not completed.(4)
In August 2002, when the new summit date was decided, a second submission to the TBS for $250,000 was prepared to update Lebanon's needs because some items had expired (medication), others were in need of maintenance or new parts, etc. The computers had to be repurchased and reconstituted since the computers supplied in 2001 had been permanently installed at the MLC. Lastly, some training activities had to be completed. Responsibility for managing this additional $250,000 was assigned to the Canadian Embassy in Beirut, which directly paid the Lebanese providers of goods and service that had been selected by the MLC.
The outputs and outcomes review was not exhaustive, in view of the constraints associated with the evaluation, especially the limited sample of interviewees and the lack of paper-based information available at DFAIT.
The following points emerged clearly with respect to the planning process:
The following summarizes the key observations with respect to the outputs of the Summit:
There was unanimous agreement concerning outcomes:
It is now clear that the six month time-frame between the signing (i.e. April 2001) of the MOU and the planned date (i.e. October 2001) of the event did not provide sufficient time for the implementation of appropriate administrative and contracting procedures, given the inherent risks associated with the event. Because "time is of the essence", IMF decided to have the CEA contracted directly by the Lebanese government, as reflected in the MOU dated 30 April, 2001 between Canada (represented by DFAIT) and Lebanon (represented by the Ministère libanais de la Culture, MLC).
The recipient country contracting option was chosen by DFAIT as it allowed the recipient country to award contracts to a third party. The recipient country contract does not fall under Canadian law, nor is it subject to Treasury Board policies or the requirements of any trade agreements (AIT, NAFTA, AGP-WTO). However, since DFAIT provided the funds and most of the goods were purchased in Canada, such an approach should not conflict with the spirit of the laws and policies that govern Canadian Government contracting procedures and its underlying principles of fairness. In other words, this option should not be used to circumvent those laws and policies which are in place for DFAIT's contracting procedures.
Often when the recipient country contracting option is chosen, a third party procurement monitor or procurement advisor is contracted by the donor to assist the recipient country in the selection process of the CEA and ensure that all procedures comply with Canadian government contracting principles. IMF had no previous experience with the recipient country contracting procedures and did not consider a contract with a procurement advisor/monitor to act as an independent monitor of the selection, procurement and payment process to ensure due diligence.
The audit identified a number of incidences where due diligence was lacking with respect to DFAIT's initial funding of $3.8M:
In summary, the Review Team could not assess the appropriateness of the payments made to the CEA during 2001/02 as it was not provided with the relevant supporting documentation from either IMF, the Lebanon government or the CEA. Accordingly, SIX cannot provide assurance that the 2001/02 payments present fairly the eligible costs related to the organization of the Summit as the Department failed to put into place appropriate due diligence practices.
As indicated in the report, IMF had to manage Canada's contribution to the Beirut Summit in emergency mode, since Canada's $4 million contribution was announced barely six months before the Summit was held. Under the circumstances, CIDA, which normally managed the contribution, preferred to transfer this responsibility to DFAIT. The events of September 11, 2001 led to the postponement of the Summit, which added to the complexity of managing this contribution.
IMF recognizes that an inconsistency between the memorandum of understanding signed with Lebanon stipulating that vouchers be made available to Canada in connection with the use of the funds, and the turnkey contract signed by Lebanon with the CEA-lump sum, definite and firm-made review of such vouchers impossible without the consent of the CEA.
SMFS should periodically challenge the adequacy of the Section 34 process as it pertains to unconventional contribution agreements.
Since the subject contribution agreement, the Department's Centre of Expertise (CoE) for Grants and Contributions is fully operational. The CoE offers an advisory, reviewing and approval service to those programs that wish to participate. Most program managers are utilizing this new service and the results to date are very encouraging with the identification and prevention of potential problems prior to their occurrence. The recommendation will be expanded to ensure that program managers are aware of their responsibilities under Section 34 of the FAA with regard to non-conventional non-assessed transfer payments.
The SMFS audit of the payment requisition will ensure that the CoE's recommendations are reflected in the resulting agreements and payments to non-conventional non-assessed transfer payments.