Auditor General Sheila Fraser said Transport Canada sees its security mandate as primarily preventing terrorism aboard aircraft, not preventing drug smuggling through airports. (Emily Chung/CBC)

Airport employees with criminal records or links may still be able to gain access to high-security areas due to gaps in how security agencies share information, says a report from Canada's auditor general.

"In the world of security intelligence, information sharing is critical," Auditor General Sheila Fraser said Tuesday in a statement before the release of the report. "Where there are legal constraints, the government needs to find a way of resolving them."

A series of status reports released Tuesday by Fraser and Scott Vaughan, the commissioner of the environment and sustainable development, found that many problems identified in previous audits on topics ranging from passport processing delays to the development of safety guidelines for drinking water have been addressed.

While security and law enforcement agencies have dealt with some problems related to intelligence and their progress was deemed "satisfactory" in that regard, Fraser flagged some outstanding issues, saying:

• Transport Canada and the RCMP are still not sharing criminal intelligence information effectively, and that means Transport Canada may still be granting security clearance to employees with criminal records or links.
• Agencies and departments involved in security say legal barriers are preventing them from sharing information.
• Some security and intelligence agencies are not subject to independent review of their intelligence activities, even though they have the power to intrude significantly on people's lives through those activities.

Fraser found the government's progress remains unsatisfactory in two audited areas:

• Government appointments to Crown corporations, the Immigration and Refugee Board, and other commissions, granting councils, tribunals and boards are too slow and poorly communicated, leading to problems such as refugee-case backlogs.
• The Canada Revenue Agency has not done enough to improve its identification and pursuit of tax cheaters among small and medium-sized businesses, focusing too much attention on returns identified as low-risk.

Fraser's previous audit of airport security was conducted in 2004. However, her more recent audit concluded that sharing of information for security screening of airport employees has not improved.

She cited figures released in 2008 from a recent "high-level" RCMP analysis of organized crime at the Vancouver, Edmonton, Calgary, Winnipeg, Toronto, Ottawa, Montreal and Halifax airports that found more than 60 airport employees with criminal links.

Worker got pass despite assault record

"Many organized crime groups were found working within or using those airports," the report said.

In addition, she highlighted one case where a worker received a security pass despite having assault and weapons convictions and being under investigation for a murder relating to drug smuggling at a large airport.

Fraser blamed that on the fact Transport Canada uses danger to passengers or aircraft as a criterion to determine whether someone should get security clearance.

"They've interpreted that to mean any kind of sabotage or any harm that would be caused to aircraft and do not see their mandate as going into criminal activity, for example drug smuggling in airports," she said at a news conference.

"Quite frankly, I think Canadians expect more than that .… They should be doing more extensive criminal checks."

Fraser noted in her report 16 cases where departments and agencies reported legal barriers to sharing information that may be necessary to ensure security. Part of the problem is the government has not yet completed research on how to balance legal requirements for protecting individuals' privacy with those for maintaining national security, nor has it provided consistent guidance in this regard, the report found.

In the case of airports specifically, Transport Canada the RCMP ended an information sharing agreement on Dec. 31, 2007, because it no longer complied with government direction, including the recommendation of the Maher Arar inquiry.

The audit found that the RCMP and Transport Canada sometimes withhold information about potential airport employees from each other, citing alleged barriers such as the Privacy Act, a lack of permission from third parties such as municipal police forces, and a lack of trust about how the information will be used.

On the other hand, Fraser cited cases where the ability to review the intelligence practices of agencies such as the RCMP, the Canadian Forces and Canada Border Services Agency were very limited even though they might have a lot of power to intrude on the lives of the public.

In response to the audit, Transport Canada and the RCMP said they are already negotiating a new agreement to exchange information relevant to airport security clearances that will address privacy concerns. Other government departments said they will also be working to boost information sharing while addressing privacy concerns.

"We've got to do a much better job," Transport Minister John Baird said Tuesday in Ottawa.

"We're in advanced discussions with the RCMP on a better, … stronger information-sharing agreement. Frankly, if we don't have one within 10 days I'm going to get our two teams together in my boardroom and not going to let them go out until it's successfully concluded."

Vacancy rates, turnover worsening on boards, tribunals: report

Fraser's sharpest criticism did not deal with national security, but the government's efforts to curb tax evasion and delays in government appointments to Crown corporations, boards and tribunals and the resulting backlog in refugee cases.

"Delays in making appointments can compromise an organization's ability to function effectively," she said. "I am especially concerned about the consequences for the Immigration and Refugee Board, given the high financial, social and human costs resulting from the Board's backlog of unresolved claims."

Fraser found that the situation is actually worsening, with higher turnover and vacancy rates at the end of her recent audit than in 1997, when she first raised the issue.

In addition, she said, poor communications that show "a lack of respect for the individuals involved" throughout the appointments process has led to situations that could discourage qualified people from accepting appointments. For example, there were cases where:

• Chairs and CEOs learned of their appointments through the media.
• Directors learned at a board meeting that they had been replaced days earlier.
• Some appointees received a call from the payroll department asking about termination arrangements as their only notice that they were being dismissed.

With respect to Canada's Revenue Agency's approach to dealing with tax cheaters among small and medium-sized businesses, Fraser's main criticisms were that:

• The agency audited far more tax returns flagged as low risk for tax evasion than those flagged as high risk by a computerized risk assessment system.
• File screeners don't have enough confidence in the computerized system, and the agency has not worked to validate the ratings provided by the system.
• The agency hasn't done enough to strengthen its program of random audits, which could be used to improve the computerized risk assessment system.

Fraser noted that businesses that cheat on taxes deprive the government of funding for programs that benefit Canadians and are unfair competition to businesses that comply with the law.

Government disagrees

In both those areas deemed unsatisfactory, the government disagrees with findings of the reports, Fraser said. The Canada Revenue Agency said it believes the report places too much emphasis on certain recommendations from previous audits.

"The Privy Council Office believes that our audit report on [government] appointments goes beyond the Auditor General's mandate."

However, the office said it will continue to support the government in the administration of its policies related to such appointments

With files from the Canadian Press