Cabinet disregarded numerous warnings in granting financial assistance to Atcon24 March 2015
FREDERICTON (GNB) – In her report tabled today in the Legislature on the government’s handling of financial assistance to the Atcon group of companies from 2008 to 2010, the auditor general of New Brunswick, Kim MacPherson, concludes the loss incurred by New Brunswick taxpayers occurred because the government of the day chose to disregard the expert advice of its senior civil servants. She also noted elected officials are not required to follow such advice.
In a unanimous motion in June 2013, the Legislative Assembly asked the auditor general to look at the financial assistance given to the Atcon group of companies and Robert Tozer. It also asked her to provide recommendations to improve the performance of the Department of Economic Development. The request came following Atcon’s bankruptcy, which left the province with close to $70 million in unrecovered funds.
Her report concludes the government provided loan guarantees to Atcon despite numerous recommendations to reject Atcon’s request for assistance, and then compounded the province’s risk of loss by giving up its first security position on Atcon’s assets in favour of Atcon's bank.
“Nothing we saw during our examination indicates decisions taken by the government on this file were reasonable in the circumstances,” said MacPherson. “In my opinion, cabinet displayed a very troubling disregard for taxpayers' money.”
The auditor general makes 19 new recommendations to improve the management of financial assistance to industry, but she notes that 14 of 36 prior auditor general recommendations have not been implemented. She says that more has to be done.
“Our recommendations alone cannot prevent another Atcon,” she said. “As long as elected officials can influence the decision process, such situations could reoccur.”
Almost $1 billion in government assistance to industry has been approved by the Department of Economic Development in the past 10 years. However, there is no clear picture of the results of these investments because the department is not reporting on the actual performance achieved.
The full report, entitled Financial Assistance to Atcon Holdings Inc. and Industry can be found at www.agnb-vgnb.ca.