A spokesperson for Dalian Enterprises Inc., a contractor that did some work on the federal government's ArriveCan app, says steps were in place to address conflict-of-interest concerns related to their founder, who later went to work for the Department of National Defence. A person holds a smartphone set to the opening screen of the app in a photo illustration made in Toronto on June 29, 2022. THE CANADIAN PRESS/Giordano Ciampini

OTTAWA - A company that worked on the ArriveCan app is defending its integrity and asserts steps were taken to address conflict-of-interest concerns related to its founder, who recently went to work for the Department of National Defence.

Dalian Enterprises Inc. said David Yeo made the appropriate conflict-of-interest filing, resigned as a director and officer and put his company shares in a blind trust since its main customer is the government of Canada.

Yeo also agreed not to participate in any direct or indirect work that the company was doing for the Defence Department, said a spokesperson for the company.

The spokesperson said in a statement that from 2002 until September 2023, Yeo, a former military member, "was not an employee of the government of Canada in any capacity."

He "only provided IT professional services on a contract basis through Dalian to the Department of National Defence," the statement said.

It's the first time the company has publicly responded after CTV News reported last month on Yeo's employment status and Dalian's previous work on ArriveCan. The government paid the company $7.9 million as part of the app's nearly $60-million overall cost.

Following that report, the Defence Department announced that Yeo was suspended and that it had launched an internal investigation.

A week ago, Public Services and Procurement Canada announced it was suspending the company's security status "in response to information that recently came to light."

It said that the company would no longer be able to work on federal contracts or participate in new procurement opportunities.

On Friday, the Defence Department would only say the investigation is still ongoing.

Dalian's spokesperson said Yeo would not be available for an interview.

When he began working for the government in September, the company's work for ArriveCan had long since concluded, the spokesperson said.

Dalian, along with Coradix Technology Consulting, were authorized in August of 2019 to work on various Canada Border Services Agency projects.

That later included the ArriveCan app, which has since fallen under intense scrutiny for its bloated cost.

Coradix has also been suspended from government work.

When Yeo testified before a House of Commons committee in October, he spoke to his integrity. He didn't mention his current employment and wasn't asked about it.

"During my 36-year career with the Canadian army, which included deployments to Afghanistan and the Middle East, I was held to the highest levels of integrity, and of course, I continue to conduct myself in this manner today," Yeo said.

He was recently invited to speak to the committee again, after the department announced its investigation.

Earlier this week, Canada's auditor General Karen Hogan told MPs at a committee hearing about Yeo's connection to the Department of National Defence.

She said that connection wasn't detected as part of her audit of the ArriveCan project because the Defence Department was not involved in the development of the app.

But she said employees' full disclosure is "essential" so that supervisors can assess if any outside work is incompatible with the person's job, and "whether it might have an impact on their ability to carry out their duties in an objective and fair manner."

"The disclosure is maybe not always happening, and when the disclosure happens you can take the measures that you need," Hogan said.

Hogan said there have been times in her own office when employees disclosed certain information and their employer is "fine with it." Other times, that's not the case. But it's up to the supervisor to decide, she said.

The Treasury Board Secretariat said on Friday it does not have centralized records on the number of government of Canada employees that are engaged in outside employment.

Dalian said since the company was founded in 2002, it has been regularly audited by what is now known as Indigenous Services Canada.

That department oversees compliance requirements for Indigenous-owned businesses when it comes to certain procurement opportunities.

"In the most recent such audit, conducted December 2023 to February 2024, ISC confirmed that Dalian successfully met (Procurement Strategy for Indigenous Business) criteria," the spokesperson said.

This report by The Canadian Press was first published March 8, 2024.

News from © The Canadian Press, 2024