Auditor flags millions in write-offs, cancellations

Teresa Wright
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Auditor General Jane MacAdam

Crown corporations approving write-offs without public scrutiny

Crown corporations have been cancelling and writing off millions of dollars every year without public scrutiny, according to the 2015 P.E.I. Auditor General Report.

Jane MacAdam conducted a review of write-offs and cancelled debts owed to the province as part of her annual report on the provincial finances.

She flagged problems with the way Crown corporations handle these transactions.

“What we found is that practices have changes,” she told reporters during a news conference Tuesday.

RELATED: Auditor general finds lack of oversight for contaminated sites in P.E.I.

Up until 2005, all debts written-off or cancelled by Crown corporations were fully disclosed in executive council orders, which are published and available to the public.

But sometime after 2005, government lending agencies stopped seeking treasury board or executive council approval.

Without these approvals, the write-offs and cancelled debts are not as accessible to the public and also not included in the auditor general’s annual report, thus not as transparent to the public.

For example, MacAdam flagged the province’s primary lending agency, Finance P.E.I., for writing off a total of $6.5-million since April 2012. This same agency also authorized $3.7-million in cancelled debts owed to the province in 2013-14.

“There was no approval by the Lieutenant Governor in Council for these cancellations,” MacAdam writes in her report.

“These types of cancellations have continued into fiscal 2014-15.”

She notes the province is a significant lender within the Prince Edward Island economy and that loans issued by the provincial government have dramatically increased over the last 10 years.

Between 2004-05 and 2013-14, provincial loans to external parties have ballooned from $228 million to $443 million, an increase of 94 per cent.

MacAdam told reporters Tuesday she did not conduct a full audit of these write-offs and cancelled debts, explaining she felt highlighting the non-transparency of Crown corporation practices would be sufficient to make her point.

“We felt like we didn’t need to perform a full audit to bring it to the department’s attention that they need to clarify the expectations around section 26 of the Financial Administration Act,” MacAdam said.

“We’re just pointing out that if anyone was to read our annual report and think that they were getting the full picture of all the cancellations and write offs, we just want to alert readers that’s not the case.”

In her annual review of the province’s finances, MacAdam presented a dim portrait.

“There’s a continued deterioration in the financial position of the province,” MacAdam said, pointing to the growing net debt and persistent annual deficits.

She noted that although some performance indicators have shown slight improvement over the last year, the overall trend has been concerning.

“One year does not make a trend, so if you look at it over a four-year period… the trend is unfavourable.”

P.E.I.’s net debt increased by $59.4 million in the 2013-14 fiscal year leaving the total net debt now over $2.1 billion.

That means that every man, woman and child in P.E.I. owes $14,349 toward the net debt. This does not include the additional $40 million deficit budgeted for the current fiscal year.

MacAdam also conducted speciation audits of Access P.E.I., management contaminated sites and out-of-province health services.

- She found there were no service level standards at Access P.E.I. and identified I.T. control weaknesses.

- She found Health P.E.I. was not identifying cost-saving opportunities despite the budget for off-Island health services growing 20 per cent over the last two years to $46 million. She further identified a significant amount of out-of-province health claims paid with little scrutiny, noting 50 per cent of claims she reviewed did not have required physician referrals.

- MacAdam found government does not have complete list of contaminated sites in P.E.I., mainly abandoned landfills. Also, the majority of contaminated sites owned by the province have not had environmental site assessments performed. Without these assessments, potential environmental or public safety risks are unknown.

 

twright@theguardian.pe.ca

Twitter.com/GuardianTeresa

Geographic location: Prince Edward Island

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Recent comments

  • Shamefull
    March 22, 2015 - 14:49

    Start with Griz and Brooks MacMillian and you will be led to all the corruption. Where is Chief Superintendant Gibson of RCMP and the Attorney General. Janice Sherry. Do your job or step down. This is corruption to highest

  • reality
    March 18, 2015 - 18:58

    Don't you have it figured out yet ? ----------IT'S ALL ABOUT MONEY!!------------- liberals and conservatives doing what comes naturally ------------ one party as poor as the other -- but a lot of people have their jobs and their businesses because of one party or the other and they will support that party to the end !!

  • Olga
    March 18, 2015 - 18:28

    More for the Globe and Mail: Upper level civil servants with authority to write off loans don't know the rules and laws under which they are to operate. Unbelievable --- PEI is looking like a lawless backwater operated by imbeciles.

  • Padre
    March 18, 2015 - 18:09

    So Ghiz surrounded himself with people in the higher echelon, who did not understand the rules and regulations regarding write off of loans?? I hope they have gotten their walking papers in the last couple of days from t Premier Wade. If not, we can assume that Premier Ghiz and his Ministers directed these civil servants to act outside the rules. No matter, these circumstances should be made public so the taxpayers can judge for them selves. Premier Wade must satisfy the electorate before calling an election, or be prepared to be the leader of the opposition. People won't stand for this borderline fraud.,

  • reality
    March 18, 2015 - 18:06

    Don't you have it figured out yet ? ----------IT'S ALL ABOUT MONEY!!------------- liberals and conservatives doing what comes naturally ------------ one party as poor as the other -- but a lot of people have their jobs and their businesses because of one party or the other and they will support that party to the end !!

  • freddy
    March 18, 2015 - 17:58

    The dirt keeps piling up, and the new Premier is nowhere to be found. Election time is a-coming, and I can't find the voting booth, is he has still not cleaned this up.r

  • bobby
    March 18, 2015 - 17:54

    how can we vote for the Liberals unless we see this published in details. What high level Civil Servant did NOT understand the legislation regarding writing off loans? Is he/she still there in their ignorance? What Minister presided over these people of ignorance? Did the Minister sign off as well, in his ignorance, and is he still the Minister?? This mess has to be made public and the persons responsible fired. How can we possibly operate a proper government when people are too stupid to be totally aware of their duties and responsibilities?? Wade we are all waiting to hear from you!

  • this day
    March 18, 2015 - 15:58

    @ another day Ia am glad to see you remember all these failures, All of that was disgraceful. My question is, why did the liberals not expose all this after they were elected????? But no they stpped right in and did even wore damage and losses. So that leaves me with the thought that the NDP cannot to any worse, and it is time to give them the vote, - let the other two parties ponder their methods for a while.

  • dave anger
    March 18, 2015 - 15:53

    Clean House IF we got enough smart Islanders to vote and get rid of the liberals and the conservatives out and find out where our money really went?

  • reality
    March 18, 2015 - 15:32

    Don't you have it figured out yet ? ----------IT'S ALL ABOUT MONEY!!------------- liberals and conservatives doing what comes naturally ------------ one party as poor as the other -- but a lot of people have their jobs and their businesses because of one party or the other and they will support that party to the end !!

  • Wayne MacKinnon
    March 18, 2015 - 14:50

    Time to take to the streets and demand a change in the way this province is governed. Get rid of all the Crown Corporations and let the politicians who have been elected by islanders to do their job. No more arm length Crown Corporations for politicians to hide behind. This is outright fraud and corruption, some of these people deserve to go before the courts. While I am venting, where are the civil servants who are pushing these files through? SHAME..

  • How It Is
    March 18, 2015 - 12:14

    People just keep voting them in. It's monumentally stupid. If people can't see that red/blue voting will just be more of the same then they deserve to watch their tax dollars spent this way. They're just Coke and Pepsi. All sweet and sugary and not an ounce of goodness in either of them. It doesn't even matter what other party get in. They couldn't possibly do a worse job.

  • Bob MacDonald
    March 18, 2015 - 11:29

    I believe the public has the right to know. what do you think Mr. Maclauchlan? Does letting the public know fit in with your new way of doing business?

  • Jason
    March 18, 2015 - 10:11

    At what point does this behavior become criminal? If this was the private sector, someone would be on the hook for fraud or theft.

  • Lebenonse pig
    March 18, 2015 - 10:08

    I do not understand why this fiesco was not discovered years and years ago why now? Those who have stolen from taxpayers should be brought to justice,seems we have alot of Mike Duffys on PEI, let us islanders band together and get our own off island legal lawyer to work for us to get justice for taxpayers....who is on board?

    • Bob MacDonald
      March 18, 2015 - 11:31

      Reason it wasn't discovered years and years ago is that the Auditor General has been following the ethics commissions way of doing things. This is disgraceful really but no surprise and I see no change coming down the road from either the Liberals or Conservatives.

    • Bob MacDonald
      March 18, 2015 - 11:41

      I agree with "Reality" that this is not at all helpful. If the Auditor General believes we have the right to know she should release the names. Leaving it in the hands of government officials ensures we will never know. Oh and to be clear I'm not against government lending businesses on PEI money to help them compete I just think it should be transparent.

    • Bob MacDonald
      March 18, 2015 - 11:46

      I agree with "Reality" that this is not at all helpful. If the Auditor General believes we have the right to know she should release the names. Leaving it in the hands of government officials ensures we will never know. Oh and to be clear I'm not against government lending businesses on PEI money to help them compete I just think it should be transparent.

  • Reversal
    March 18, 2015 - 10:07

    This is ridiculous, who is being held accountable? This is a sin, robbery at it's finest. How do we reverse this? Wade you can't just let this go!!

  • Does who know
    March 18, 2015 - 09:14

    Só who had the golden credit card and who should be brought to justice,What about the E-gaming fiesco thats being hush hush...I smell something fishy.

  • Another day
    March 18, 2015 - 08:54

    Polar Foods , Dundarave , Brudnell Golf Academy , Meteor Creek , Snow Crab Fiasco , IT , IT , IT , IT , IT , mega pig farms , failed court cases ( read lawyers fees and court costs after they tried to change the Human Rights Act ) . Well done Binns Government ( or lack of ! ) , I could go on but you get the picture ! Everything done to pander to Their Own . Little wonder the back room boys are so keen to get the Tories back in !

    • tis tis tis......
      March 18, 2015 - 11:44

      Yes, the Tory's did some stupid deals too! But, come on dude, we are talking for the last 10 years millions and billion every frigging year! Every time you read the paper or on the computer, all you read is the crooked and I believe illegal deals this government has put us through...... Time to get your liberal head out of your butt and see it like it is!!

    • Really?
      March 18, 2015 - 14:19

      An attempt to deflect the truth by a Liberal hack! Did you not see the increase of 228 million to 443 million dollars from 2005-2014; a 94% increase during the Ghiz years! And just last week two more loans of 22 million to Rodds and another one million to Paderno, which were issued by Wade, the new Premier and Finance Minister! Talk about corrupt and crooked Liberals!!!!

    • please
      March 18, 2015 - 15:37

      I'm not even sure where you would start to list the liberal faults .......The backroom boy of the liberal party doesn't want to talk about all the crimes against islanders! So,thye throw out these little smoke bombs hoping that we don't see all their greedy and criminal acts!! Not working we still see youuuuu!

    • Making excuses for system that abuses
      March 22, 2015 - 10:45

      Another day:are you trying to justify what your Liberals friends did over the last 8 years???................We are not ruled by elected bodies we are ruled by parties ,patronage and nepotism.....and it is KILLING us...If the NDP got in power tommorrow ...it would be NO different....they would be making up for lost time.......this political system HAS to change.

    • Another day
      March 23, 2015 - 10:51

      Yes there would be an increase in spending when the Liberals came in...to pay off all the Tory boondoggles I mentioned , Crab loans were not cleaned up till 2 years ago ! We are still suffering from incompetence in Binns appointments ! It all adds up . By the way , the " loan" to Rodds was a renewal of the terms of their existing loans , try to get your facts right before you comment . It is all out in the media for people to read .

  • I Guess
    March 18, 2015 - 08:17

    I guess we get what we deserve , we voted them in for a second time & it looks like we will give them another kick at the taxpayers this time around . Boy ; I just can't understand Islanders being so stupid .

    • Bob MacDonald
      March 18, 2015 - 11:52

      If you vote a different party in all you get is a different set of criminals. I suppose it spreads the money around the economy more though.

  • Shoeman
    March 18, 2015 - 07:17

    I have been in business for fifty years and always had to deal with banks .I have never received five cents from government. I am sick and tired of taxpayers money given to business that are here today and gone tomorrow and then their grants are written off. If a company can't do it on their own then get out of business

    • worker
      March 18, 2015 - 14:50

      $600. million in PNP money to fund private businesses in last 10 years. That enough to give every business a fair share.

  • Bobby
    March 18, 2015 - 04:48

    I envision the old ABC Laundry Detergent commercials of the 80s in my mind and I hear the words "Organized government....organized crime....is there a difference....I don't see the difference....do you see the difference?"

  • Surprise Wes
    March 17, 2015 - 19:58

    Can't wait to hear Wes Sheridans answers to all of this.

  • Concerned Islander
    March 17, 2015 - 19:52

    Hidden corruption by Ghiz and his clown health Minister and others. Full inquiry needed. The new Premier election had better do the right thing, never mind the buddy system, we the taxpayers have been taken big time

  • Dinky Dalton
    March 17, 2015 - 18:40

    It seems as though these unlawful loans get written off the books; thereby, magically transformed into grants with the stroke of a pen. Taxpayers, however, are still on the hook for the mess. This has been going on much too long. The only reason this government is in the banking business is to cater to party friends. These leeches should get their loans from chartered banks like everyone else, problem is banks would make them reveal their assets and the result would be a big REJECTED! Islanders should be outraged. One can only imagine the loans the former Pemier handed out before jumping ship. Scandalous!

  • Crooks
    March 17, 2015 - 18:36

    I guess Robert Ghiz has a lot of money to pay back.Every dime should have to be paid back.It's call a loan not a hand out.

  • WonderWhy
    March 17, 2015 - 18:32

    Why was the increase in external loans, from $228 mil to $443 mil not flagged in previous years? I assume it was incremental, but not noticed or reported on in the past? This province needs to stop lending OUR tax dollars to corporations or entities who hide their identity behind a numbered company. This entire province, and how we do business, needs a revamp. Making this easy for the NDP. Hopefully, if they screw up it will be from honest mistakes.

  • AGREED
    March 17, 2015 - 18:30

    Would part of this tally be snow crab loans to Binns faithful or unpaid interest there of ? Who let it go ? There must have some assets to liquidate . WHO wrote it off ???

    • tis tis tis......
      March 17, 2015 - 20:25

      94% increase.......must I say more!! Gritz gave out a lot of silver spoons! And now we are going to have to put up with less services because, of all the special project Gritz and his bunch of crooks, cooked up with the liberal friends and big supporter! Way to go you bunch of crooks

  • From Away
    March 17, 2015 - 16:53

    Wow I wonder how many Hotels/Inns and Restaurants have the PEI goverment financed??? Oh well at least they have created a bunch of min wage jobs that they probably finance as well........now who will end up with the golf courses!!!!

    • Bill Kays
      Bill Kays
      March 18, 2015 - 11:35

      That's because they have embraced the tourism model at the expense of the farming and fishing industries. Government has no business being involved in business.

  • douglas
    March 17, 2015 - 16:31

    much like we expected, an increase of 94%-- to friends and family. Then write-offs hidden from view. Long overdue that the taxpayers see a list of who is gifted with heir money. The new Premier better come good on this one too, - the cases are mounting and an election rides on how 'transparent' he is willing to be.

  • bill
    March 17, 2015 - 16:27

    absolutely not helpful, -- Wade better get these hidden 'write-offs' on the web site for all to see. I don't understand why the AG is not able to give details in her report.

  • Bill Kays
    Bill Kays
    March 17, 2015 - 16:02

    I wonder who is legally counselling them - quote "some Crown corporations either have authority or have interpreted legislation to mean they can authorize such transactions without having to seek approval of treasury board or the Lieutenant Governor in Council". I expect that there will be investigation into this as it could lead down a very big rabbit hole.

  • Daniel
    March 17, 2015 - 15:11

    Huh??? Cant see the forest for the trees.

  • Laughing Stock
    March 17, 2015 - 15:00

    "Between 2004-05 and 2013-14, provincial loans made to external parties have ballooned from $228 million to $443 million, an increase of 94 per cent." WHAT??? Someone force the RCMP to handle this! We are the laughing stock of Canada. Go NDP Go

  • please
    March 17, 2015 - 14:57

    Tell use something we didn't know :-!

  • Peigrl
    March 17, 2015 - 14:37

    So is anyone accountable for the quality of loans? Why so much in "secret write offs "

  • ProChoicePEI
    March 17, 2015 - 14:33

    Highlighted in the AG's report was the need for cost saving measures re: off-island health services. It's worth reminding that the Liberal government was offered a plan to localize abortion on PEI; a cost saving measure to the tune of $83,000 annually, and Premier Ghiz turned it down because it was "against government policy". The only problem is, the policy doesn't exist and the Liberals have offered no explanation as to why they would not want to afford better health care to Islanders and save tens of thousands doing so. Health PEI supported this proposal and the only reason it was shut down is because of the shame and stigma (maybe threats) perpetuated by anti-abortion advocates. It's time for all PEI political parties to public ally state their support for women's rights. Everyone has the right to bodily autonomy and reproductive choice.

    • Bill Kays
      Bill Kays
      March 18, 2015 - 11:32

      They don't want to allow legalized murder. It's bad enough we have to pay someone else to do the dirty deed. It is worth more not to have the "procedure" you call it, murder I call it.

  • reality
    March 17, 2015 - 14:12

    not at all helpful --something similar to telling the Pope that people sin !!

    • Why?
      March 17, 2015 - 20:13

      Why do you insist on commenting without reading the story or the actual document? You are worse of a fool than kays. Whine about everything for the sake of whining.