Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 10 - Evidence, May 29, 2001
OTTAWA, Tuesday May 29, 2001
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-4, to establish a foundation to fund sustainable development technology, and Bill C-3, to amend the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Public Participation Act, met this day at 6:13 p.m. to give consideration to the bills.Senator Nicholas W. Taylor (Chairman) in the Chair
[English]
The Chairman: The meeting will come to order. I apologize for the delay, but the Senate has just adjourned.
This evening we will be discussing Bill C-4, to establish a foundation to fund sustainable development technology. Our witnesses are Ms Sheila Fraser, Ms Maria Barrados and Mr. John Wiersema. Mr. Wiersema, from your name, I would assume you are from northern Alberta or southern Manitoba.
Mr. John Wiersema, Assistant Auditor General, Audit Operations Branch, Office of the Auditor General of Canada: I an from northern Holland.
Senator Buchanan: Ms Fraser, are you a Nova Scotian?
Ms Sheila Fraser, Interim Auditor General, Office of the Auditor General of Canada: No, I am not.
The Chairman: Please proceed, Ms Fraser. I am sorry that I missed your last appearance. However, I read your evidence, and I was quite impressed.
Ms Fraser: Mr. Chairman, we would thank you and the committee for inviting us to discuss Bill C-4, to establish a foundation to fund sustainable development technology. I have with me today Ms Maria Barrados and Mr. John Wiersama, who are both assistant auditors general.
I would raise several issues today about the accounting, governance and accountability of the Canada Foundation for Sustainable Development Technology.
I will begin with the accounting issue. I am concerned about the transfer of large amounts of public money to foundations long before it will be spent on delivering services. I am also concerned that the government records these transfers as expenditures in the public accounts, even though the money may still be in the bank accounts of the foundations.
We have not yet audited the transfer to the Canada Foundation for Sustainable Development Technology. When we do, we will assess whether there is appropriate authority in place for this transfer at the time it was made and whether it has been appropriately accounted for.
When we audit the 2001 Public Accounts later this summer, we will pay particular attention to these issues in the transfer to the sustainable development foundation, as well as similar transfers to other organizations. Any significant concerns will be reported this fall with the auditor's report, or the observations on the 2001 financial statements of the government, or as an audit note in our December 2001 report to Parliament.
[Translation]
I will now turn to issues of governance and accountability. Chapter 23 of the Auditor General's November 1999 Report included a government-wide audit of accountability in new types of governance arrangements in which organizations outside the federal government deliver federal programs. In that audit, we recognized that such new arrangements can be appropriate forms of program delivery.
We are currently following up on our November 1999 audit and plan to report our findings to Parliament in April 2002. As part of that audit, we will examine the new arrangements announced in the 2000 Budget, including the Canada Foundation for Sustainable Development Technology.
The proposed foundation will engage in the exercise of a public trust. Canadians expect entities that use discretion in redistributing public resources or exercising public authority to operate in a way that is non-partisan, impartial, fair, equitable, prudent, honest, and professional.
They also expect that Parliament will be able to effectively scrutinize the way tax dollars are spent.
In our 1999 audit, we recommended a governing framework for such arrangements that would provide for the following: appropriate reporting to Parliament and the public; effective accountability mechanisms; adequate transparency; and protection of the public interest.
That governing framework is based on the following two fundamental principles of parliamentary democracy: firstly, parliamentary sovereignty over federal policy. Whoever holds discretionary authority to spend federal taxpayers' money or to exercise federal authority must not be exempt from potential scrutiny by Parliament.
Secondly, regarding stewardship of the public trust, any arrangement delivering federal programs and services must respect the public trust and observe the public sector values of prudence, propriety, fairness, impartiality and equity.
Bill C-4 contains provisions that relate to the governing framework we recommended in our 1999 audit. For example, the foundation will prepare an annual report to be made public and tabled in Parliament. It will include audited financial statements, statements of investment, and funding policies and activities. The annual report will also include a statement of plans for the next year and an assessment of the overall results achieved by projects both during the year in review and since the inception of the foundation.
As to its governing structure, the foundation will have 15 members and operate with a board of directors. The Minister of Natural Resources has indicated that the members of the Foundation would represent its stakeholders and potential clients, in a manner analogous to the shareholders of a corporation. We are concerned that adequate mechanisms be put in place to protect the broader public interest, including complaint and redress mechanisms and measures to ensure that public sector values are embedded in the corporate culture; ensure adequate access by the public to corporate information; resolve disputes between the minister and the foundation; and allow the minister, on an exceptional basis, to intervene with appropriate corrective measures where the fulfilment of the foundation's federal public purpose is at risk.
[English]
The access to information issue has been raised in your committee. We believe that adequate transparency is important in bodies such as the foundation. There needs to be a provision for access to corporate information that is relevant to the delivery of federal, public policy functions. Legitimate concerns about personal privacy and commercial confidentiality must be respected. We are concerned that there be adequate audit provisions - another subject that this committee and the house have raised.
Honourable senators, this foundation will fulfil a public policy purpose. Auditors' reports on a corporation's financial statements will attest to whether the financial statements fairly present the financial position and operating results of the corporation. In our 1999 audit, we suggested that in cases like this Parliament also needs to receive independent audit assurance that taxpayers are receiving value for their tax dollars. Were this public purpose to be carried out by a granting council or a government department, there would be provision for a value-for-money audit, or special examination in the case of a Crown corporation.
The funding agreement between the government and the foundation will be subject to scrutiny by the Auditor General. However, we would have authority to look at only the departmental role and responsibilities, including due diligence by the department in making up-front arrangements with the foundation for the payment of public money through the funding agreement. We would have no authority to look at the operations of the foundation, unless we were appointed as external auditors under the act. Therefore, we would be unable to provide any assurance to Parliament and the public about the prudence and probity of the foundation's use of public funds and authorities, or its performance in achieving public policy objectives.
As new bodies such as the Canada Foundation for Sustainable Development Technology are being created, and Parliament's auditor is not the appointed auditor, the question of the Auditor General's role needs to be addressed. In that way, Parliament can obtain an independent assessment of the management of taxpayers' dollars. To what extent should the Auditor General be able to follow the dollar? When the need arises, should the Auditor General be able to audit the organization directly, or carry out an audit of the fairness and reliability of the performance information reported to Parliament? We encourage Parliament to review this question and resolve the level of access for its auditor.
In conclusion, we raise a number of concerns about how transfers to the Canada Foundation for Sustainable Development Technology are recorded in the Public Accounts of Canada. We are also concerned about the provisions for governance and accountability. The proposed legislation appears to contain some features that we called for in our 1999 audit, but not others, notably mechanisms that would ensure protection of the broader public interest.
Fiscal and technological forces are pushing governments to use innovative, non-traditional ways of delivering programs and services. As we move to these new forms of delivery, we must be careful not to weaken fundamental principles of Parliamentary democracy along the way.
We would be pleased to answer any questions members of committee may have.
The Chairman: That was a hard-hitting and straight-to-the-point presentation.
Senator Spivak: What are the advantages to a government in using this kind of foundation, other than involving people as members of the board of directors? Why, in your opinion, do you think that those provisions for governance and accountability are not in place? I am not asking for the political motives, but perhaps there are technical reasons that we do not know about. What are those reasons? This is not the only such body. I also have a concern about the investment board of the Canada Pension Plan. In our discussions on that board, similar questions were raised. In that instance there are even more implications. Could you speculate on what might be the technical and legal reasons for this? Have you studied this? How many such bodies are there, and what are the similarities and differences? Ms Fraser: There are several of these organizations. I believe that they were established with the intention of permitting greater flexibilities and more efficiency in the delivery of services, so that they would not be constrained by certain rules and procedures of the core government, if you wish. Perhaps there was the possibility of bringing in private funds, so a mechanism to allow for that was set up. To my knowledge, there has been no study or evaluation done which would indicate that this type of foundation or agency is actually providing anything different from the traditional core government. It would be worthwhile for government to carry out a review of these new, alternative service delivery mechanisms to assess the advantages, the disadvantages and what needs to be corrected to move forward. I will ask Ms Barrados to comment on the numbers which were part of our 1999 audit. Ms Maria Barrados, Assistant Auditor General, Audit Operations Branch, Office of the Auditor General of Canada: In 1999 when we did our audit in this area, we found that there was no inventory. We then took a survey and found that there were 77 new arrangements. They were a mixture of different types of arrangements. There were 51 collaborative arrangements, which are different from the ones you are examining today. In those instances there was a partnering, often with two levels of government, or with NGOs. There were also 26 delegated arrangements. Those are similar to the arrangements for the foundation. Since that time, new arrangements have been announced. Senator Spivak: As I understand it, private organizations can contribute to this foundation. That is a troubling issue, because it means that the agenda can be co-opted. Does that concern you? That may not necessarily be on the government's agenda. How is that to be followed up? For example, although there is a terrific need for more money for research, there are eminent researchers in Canada who are deploring the need for corporate-matching funds, because there are many things that corporations are not interested in that might be in the public interest. What impact does that arrangement have on the public interest? What prevents the public interest from being subverted by a corporate interest? Ms Fraser: In answer to the senator's question, the information - if it is contained anywhere - would be found in the actual funding agreement between the federal government and the foundation itself. Senator Spivak: Is that going to be transparent? Ms Fraser: That should be transparent. That document should be public. In there, we would hope to find fairly specific criteria for the kinds of projects that should be financed and supported. We have raised the whole issue of transparency and the information that the foundation should be providing to the public, notably, the criteria, the kinds of projects that will be funded, and the points to be made. I would hope that addressing those issues would also, in part, address some of the concerns that you might have. Senator Spivak: Are they subject to access to information? Ms Fraser: No. Senator Spivak: That is a huge flaw. Ms Barrados: Another concern about the creation of these new bodies is the level of reporting and the kind of information that comes with the reporting. There is a commitment to provide financial statements, but is there going to be enough information to provide Parliament with some comfort that there is value for money in the expenditures and that they are being carried out in a way that Parliament wishes? Senator Spivak: What would you recommend to address that issue? If we were to consider amendments, for example, what would be your recommendations to deal with access to information, transparency, and protection of the public interest? Ms Barrados: We are always careful about those matters where we have not done a detailed audit. In the audit report of November, 1999, we lay out a framework with the kinds of elements we would expect to see in any of these new arrangements. These new arrangements can be creative and innovative, but an important balance needs to be put in place. The Chairman: I do not quite understand paragraph 14 where you say you suggested that Parliament needs to receive an independent audit assurance. Are you referring to your office or to some other body? When you say "independent audit assurance," are you talking about auditors entirely outside the public sector? Ms Fraser: There is a provision now for the audit of financial statements. The Chairman: Would you then consider yourself to be on the outside? Ms Fraser: The issue is that performance information will be published in the annual report, but there will be no assurance that that performance information is complete, adequate and correct. That element would be important in ensuring that there is value for money. There could be provision for an internal audit, but it would not be made public. We are suggesting some assurance should be given on that performance information. We are questioning the role of Auditor General in doing this work, either as auditor of the foundation, which appears unlikely, or as Parliament's auditor, should there be some authority given to the Auditor General to do this work. The Chairman: As parliamentarians, are we better to ask you to look over the shoulder of the audit done by the organization, or are we better to write into the law that you do the audit all the way through? Ms Fraser: I am afraid my answer could appear to be self serving. We obviously would like to have the issue resolved. Who audits the financial statements is a lesser point. I would like to see the Office of the Auditor General of Canada have access to audit some of these foundation and to carry out value-for-money audits, which brings up a broader question of the mandate of the office. The Chairman: I can see you are concerned that they are growing like Topsy. Obviously, there must be a way around the Auditor General; otherwise, they would not be growing in that way. Ms Fraser: The Auditor General has no access to any of these organizations. Senator Kelleher: In paragraph 15 of your presentation, you discuss the things that you will not be able to do and the things that may not be done. Could this not be remedied by the act setting out in detail, if we are to have independent auditors, the criteria the independent auditors would have to follow in the preparation of their report? Ms Fraser: Yes, it could. At the moment, the only provision is strictly for an audit of financial statements. It does not cover any kind of value-for-money audit or audit of performance information. Senator Kelleher: It would seem that there are two remedies here. Either we give the Auditor General the authority to do it, or we amend the act by setting out the scope of the audit to be done by the independent auditors. I would refer to paragraphs 2 and 3 of your statement. As I recall, this was a case where the foundation had not even been created, and we plucked off the shelf some corporation that had been incorporated. In the legal business, it is known as a "shelf company." It was not a case of just transferring the money to the new corporation. No corporation even existed. I am very concerned about the legality and propriety of that kind of situation. Would you comment on that, if you can? When the committee questioned why the money was being transferred at that specific time, the answer we were given was, "Because the money is available now. If it is not taken now, it will be lost." I have had experience running a few ministries. There is always that kind of risk. However, I am having trouble accepting that reason or excuse for transferring money holus-bolus, saying, "If we don't grab it now, we will lose it. It will go back into the general accounts, and we will have to start all over again." My question is this: how accurate is that explanation? Ms Fraser: We too are concerned about the issue of the authority under which these payments were made. I would like to point out some dates. Unfortunately, we have not completed all our audit work, and that will be done as part of public accounts work. The funding agreement was signed in March, and in April the actual payments were made. The payments were actually made after the year end. Senator Kelleher: Were those payments made to the shelf company? Ms Fraser: Yes. There was $25 million paid by the Department of the Environment, and $25 million was paid by Natural Resources Canada. We do not know at this point if the government will want to record those payments as expenditures in the year ended March 31, 2001, or not. They would set it up as an account payable. The Chairman: I believe the minister assured us that that was the reason for taking it out and putting it in last year's budget. Ms Fraser: That raises an issue for us because the payments were actually made after the year end. I do not want to presume what our audit findings will be, but there are some issues about dates and we want to assure that the authorities under which those payments were made were appropriate. Senator Kelleher: Can you express an opinion on the way it was done in this case, which was to make the transfer to a shelf company, in trust, for a foundation that had not yet been created? Ms Fraser: I can say that I do not like the way that that series of transactions was done. We would have preferred that parliamentary approval be given to this foundation and to the amounts of money that would be sent into it, yes. The money, as I mentioned, is being sent out of government before services can ever be delivered. The Chairman: Not only that, it did not go to a foundation, it went to a shelf company. Some of us would be in big trouble if we did that. Senator Cochrane: I have a supplementary to the question of Senator Kelleher. You mentioned two departments, the Department of the Environment and Natural Resources Canada. Those two departments are responsible to the Auditor General, are they not? Ms Fraser: Yes. Senator Cochrane: Do you agree with the minister's argument that those financial arrangements allow you an opening to examine these expenditures through the departments? Ms Fraser: We are able to look at the funding agreements and the payment made from the department to the foundation. We are unable to look at what the foundation then does with that money. We can audit those two cheques of $25 million, but we are not able to look at what happens with the $50 million beyond that. Senator Cochrane: What is the purpose of having the foundation appoint its own independent auditor? That is recommended in this bill. It will have its own independent auditor. What about funds in the future? Other foundations have had millions poured into them. Could the government not provide funding directly to the foundation instead of going through the departments and then completely evade accountability to you? Is that possible? Ms Fraser: The issue is not that the funds come from these departments, the issue is that we do not have access to the books of the foundation. We can actually audit any money that the government puts into these foundations, it is just that once it is there we no longer can see what happens to the funds. Senator Cochrane: Will that also apply to any future funding? Ms Fraser: Yes. Senator Kelleher: Mr. Chairman, I do not believe the second part of my question was answered. It concerned the explanation given to this committee by the minister as to why the money the transfer of money took place when it did. The comment was made, "If we don't do it, we'll lose it." I have a little trouble with that. Ms Fraser: I can assure the senator that we will look very seriously at these transactions when we do our public accounts audit. I know the minister has indicated that, but we do not know if they will record this as an expense for the year ended March 2001. We also share your concern, and we will be raising the issue, as may be appropriate, in our audit report on the public accounts. Senator Christensen: I want some clarification of your abilities to audit. You can audit the funds as they go to the foundation, but once they get into the foundation you can audit the auditor that audited it but you cannot audit what he audited; is that correct? Ms Fraser: No, Mr. Chairman, we cannot even do that. We can audit the payments from the government to the foundation but then our role ends. We do not audit the auditor.We have no access to any books or records of the foundation. Senator Cochrane: On Wednesday, May 2, I presented similar arguments in the chamber. They were almost verbatim to what you have said here, so I am rather pleased that at least several people are thinking about why something is not being done in this regard. In a November, 1999 report, entitled, "Matter of Special Importance," your predecessor wrote that, by their very nature, these arrangements challenge the traditional relationship that these ministers are answerable to Parliament for their policies and programs. Ministers are never wholly responsible for them. In some cases arrangements have been intentionally set up to be totally independent from ministers, even though they may depend on federal funds and federal authority. Your predecessor was writing about what he called, "new government arrangements." This foundation, which is to be set up under Bill C-4, would certainly fall into this category. Do you agree with your predecessor's assessment? Is the minister avoiding responsibility by setting up this foundation? Is the government avoiding accountability to Parliament by making the foundation subject to reporting to its own self-appointed auditor rather than to you? Ms Fraser: I would agree with the senator and the comments that Mr. Desautels made about these arrangements - that they do affect the way the traditional accountability model worked. It is true that the minister is not accountable for these funds. In fact, once the monies have been transferred into these foundations, there is very little that the minister can do. If these foundations do not live up to the purpose for which they were created, there is no mechanism for the minister to intervene and re-establish. They have been set up so that the government does not control the membership or the board of directors. It is very much an "independent" organization from government. Senator Spivak: That might be all very well if there were transparency and accountability. Ms Fraser: We agree that would be fine, as long as there is some mechanism whereby, if things do go wrong, there is a way to pull it back. Senator Spivak: There could be a financial overseeing mechanism. I would refer to the Auditor General's report of February, 2001. It states that they found 26 arrangements and that, in arrangements where the federal government had delegated decision making to a partner, there was little reporting, and performance expectations generally were not related to outcomes. There were no baselines against which to measure progress and to determine whether the arrangement was working. Other cases lacked adequate measures to protect the public interest, such as complaint and redress mechanisms and rules on conflicts of interest. Do you know if anyone in the House of Commons raised any of these questions before the bill was introduced in the Senate? Ms Fraser: Yes, to my knowledge they did. I know the issues were raised. Senator Spivak: Questions were raised, but that was all. The Chairman: In paragraph 11 of your paper you say that the Minister of Natural Resources has indicated that the members of the foundation would represent its stakeholders and potential clients. I have been in politics long enough to be suspicious of the word "indicate." What would you do to tighten that up? Ms Fraser: Mr. Chairman, we took that from testimony the minister gave before this committee on May 15. The Chairman: I see. We have invited the minister back to answer to many of these things, in any event. You have done a very good job of putting a hand grenade in the nest. Honourable senators, we will move on to Bill C-3, to amend the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Public Participation Act. This evening we will hear from Mr. Bernard Michel from Cameco Corporation. Do you wish to make an opening statement, Mr. Michel? Mr. Bernard M. Michel, Chair and Chief Executive Officer, Cameco Corporation:Mr. Chairman, I thought my purpose here was to answer questions from your committee. If it is your wish, I will mention what Cameco Corporation is and why we are here. The Chairman: We particularly want to know why you believe that it is important that the restrictions on ownership in Cameco be removed, particularly when uranium is considered to be a strategic mineral. Mr. Michel: Mr. Chairman, as you know, Cameco was created in 1988 through a merger of Eldorado Nuclear and the Saskatchewan Mining Development Corporation. The company was created with the mandate, first, to become a world leader in the production of uranium and, second, to become privatized. That is what the company has done. We initiated privatization through the issue of government shares in 1991, and today all but 9 per cent of the shares of Cameco are publicly held, with that 9 per cent being held by the Government of Saskatchewan. We are the largest producer of uranium in the world and the largest supplier of uranium to the world. We have great participation in the business of converting uranium to more advanced nuclear products in the form of uranium hexafluoride and uranium dioxide. We also have a 15 per cent interest in the Bruce reactors in Ontario, a facility which has a capacity of 1,500 megawatts. We also operate and have a one-third interest in a very large gold mine in Central Asia. Cameco is publicly traded. About 95 per cent of our shares are held in Canada today but, like every company, we need to grow. In order to grow, we need to acquire companies in the nuclear business, and from time to time we face the need to issue shares for that purpose. We wish to be able to offer these shares to uranium or nuclear companies outside of Canada. Currently, under the act which created Eldorado Nuclear, no non-resident can hold more than 5 per cent of the shares and, in aggregate, the non-resident shareholders can vote no more than 20 per cent of the shares. In order to gain access to capital markets in foreign countries, we have asked that individual ownership be increased. We propose that it be increased from 5 to 15 per cent, and that the maximum voting be moved from 20 to 25 per cent, that being the substance of the amendment before your committee. Considering what our share value is today, an increase from 5 per cent to 15 per cent would enable us to raise equity in foreign markets of about $100 million at today's share price, up to $400 million based on the same value. We believe that this is in the interest of Cameco and its shareholders. Senator Spivak: It is well understood that every company must grow, but is there a limit to growth? That is a rhetorical question. Could a 25 per cent shareholder control a company, regardless of the identity of the majority of directors? I have heard it stated that 25 per cent of ownership is effective control. Mr. Michel: The 25 per cent applies to the votes counted, not to votes held by a single shareholder. The maximum for a single shareholder, as indicated in this amendment, is 15 per cent. Senator Spivak: So it is the aggregate. Mr. Michel:Exactly. Senator Taylor: The aggregate is 25 per cent; the individual is 15 per cent. Senator Spivak: I understand that, but it seems to me that if the non-residents banded together they could effectively control the company. Mr. Michel: If the non-residents voted together, they could vote a maximum of 25 per cent of the votes against 75 per cent voted by Canadian residents. Senator Spivak: Are you saying that it is not correct that 25 per cent could control a company? Mr. Michel: I would not think that is a concern of Cameco, given the very large holdings by Canadian institutions of the company. It is not a likely scenario. Senator Spivak: What do you consider to be the strategic importance of this for Canada? Canadians do need to retain control of it. Obviously some taxpayer money was in this company at the beginning. Have taxpayers funded you? Mr. Michel: The taxpayers of Canada have not funded us. I would not agree with that. Initially, of the two companies that were owned, one was owned by the federal government, and the other by the Government of Saskatchewan. When the company was created, we transferred $650 million to the two companies we are buying the shares for, Eldorado Nuclear and Saskatchewan Mining Development Corporation. The shares were sold between 1991 and 1996. Senator Spivak: In other words, you are saying no taxpayer monies were used here and government loans were not made. Mr. Michel: Senator, I can say for certain that the Government of Saskatchewan made a great deal of money out of the transaction. I cannot answer that question for the federal government because I do not know at what price the shares of Eldorado were carried in the Government of Canada's book. The Chairman: I do not think it is share ownership that we are concerned about. We are wondering whether, at any time in the last 20 years, or since you put Cameco together, the federal government has loaned Cameco any money that was later forgiven or written off. Mr. Michel: No, never. The Chairman: That is a practice of certain provincial governments such as Alberta and a few others. They lend the company money to start it and then they forgive the loan. Mr. Michel: There has never been any such issue in the case of Cameco. Senator Taylor: It is a little puzzling to me why Cameco non-resident share ownership is being moved from 5 to 15 per cent, whereas Petro-Canada's non-resident share ownership has moved to 25 per cent. In other words, Petro-Canada has 10 per cent more foreign shareholders than Cameco. As well, Petro-Canada has no limit on the aggregate. In other words, you have a limit on your aggregate of 25 per cent, but Petro-Canada has no limit. Do you think you are being treated unfairly? Mr. Michel: I cannot answer that question. There was a decision by the Government of Canada to consider that oil and gas is different from nuclear material, and we interpret that difference as being a way to underline the fact that uranium, being a nuclear material, has to be considered in a different light by the Government of Canada. It is a policy that we accept. The Chairman: You mentioned that the directors, by law, will still be Canadians, or residents, I should say. Mr. Michel: The majority, yes. The Chairman: I am concerned because those directors are elected by the general voting public, and they will owe their loyalty partly to the company but maybe largely to the shareholders who elected them. Do you know what the phrase "Uncle Tom" means? Mr. Michel: No. The Chairman: We could have a whole board of directors of Uncle Toms, elected by the foreign shareholders. Does that bother you? Senator Spivak: Pliant directors. Mr. Michel: We comply with the Canadian Corporations Act which demands that the majority of directors be Canadian residents. The Chairman: Mr. Michel, as a international businessman, you know that Mexico is an area where shareholders nominate their lawyers, their brothers-in-law and their friends, as residents, to the board. Senator Spivak: That is how they control it. Mr. Michel: That may be a genuine concern, I do not know but, as chairman of the company, and as long as I remain so, I intend not to play with the intent of the law. I would consider it totally inappropriate. If you are suggesting that there could be a consideration of appointing nominal residents, I can assure you that this is not at all a way that Cameco would adopt to conduct its business. Senator Taylor: Some political jurisdictions in the world retain the right to appoint perhaps 25 per cent of the board. In that way, the government is certain that 25 per cent of the board are residents and owe their position on the board to the government of the day. Would that bother you very much? Mr. Michel: It would bother me very much, because I am of the view that companies manage the money of shareholders, and shareholders have to appoint the directors. I do not see why governments would have a role to play in the selection of directors for publicly held companies. Maybe I have a strong bias. Senator Cochrane: According to our background document, conditions have changed in recent years to the extent that government believes that these restrictions are unnecessarily limiting potential growth as well as management flexibility. Bill C-3 has been introduced to remove some of these restrictions. Do you believe that if these restrictions were lifted, your company would progress much faster? Is that what you are telling us? Mr. Michel: Senator, I do not say we would progress much faster. A corporation can grow when it sees opportunities to do so. Today, I have no specific opportunity to issue shares to foreign shareholders, but we believe that it is a flexibility that should be available to us because we now have opportunities to take advantage of it. Senator Cochrane: Off the cuff, what is your share price today? Mr. Michel: The share price yesterday was at $40 or $42 per share. The Chairman: You went up from about $25 six months ago. Mr. Michel: The shares of Cameco were issued at $12.50 in June of 1991. They peaked at $74 in early 1996, declined to $14 a year ago when everyone was investing in technology stock, and they were at between $40 and $43 in the past week. Senator Spivak: I have another question which does not relate to the bill, Mr. Chairman. It relates to environmental practices, and perhaps it is inappropriate to ask that question at this time. The Chairman: It is an environmentally clean fuel. Senator Spivak: I am talking about the mining of it. Perhaps you could give us a little comfort and tell us whether, as your share prices increased, your environmental practices have improved. Mr. Michel: I would assure the committee that we are under intense scrutiny by the Canadian Nuclear Regulatory Safety Commission and by the provincial Department of the Environment, and we pride ourselves in being exemplary in the areas of environment and safety. I am pleased to advise your committee that we are one of the few companies to appear on the Dow Jones Index precisely because of our performance in environment and safety. Senator Spivak: You are a closed system. In other words, you do not leave stuff lying around when you have finished mining. Is that so? Mr. Michel: No, every mine produces residues which are called tailings. Senator Spivak: What do you do with them? Mr. Michel: They are, today, placed back into the open pit where they came from. Senator Spivak: Do they not leak into the water system? Mr. Michel: They do not leak into the water. Everything in nature leaks. What is important is at what rate it leaks. The Chairman: In other words, the water is no different from before the mine was discovered. You are only putting back tailings, not concentrates. Mr. Michel: The water is incredibly clean. Senator Spivak: Would you drink it? Mr. Michel: Maybe let me make this comment: You have probably noticed that I have a French accent. I was born and raised in France where people buy Vichy water from the mountains in the central part of France. I can assure you the radioactivity of the Vichy water is greater than that of the effluent from our mines. Senator Spivak: That is very reassuring. Senator Cochrane: Are the tailings left in an open pit? Mr. Michel: Yes. Eventually it is plugged or covered. The Chairman: Thank you very much. The committee adjourned.