E-gaming loan unpaid to P.E.I. government from Mi’kmaq Confederacy

Teresa Wright
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Heath MacDonald, minister of economic development and tourism leaves the floor of the P.E.I. Legislature after the end of the day's sitting Friday, Nov. 13, 2015.

Province confirms $950K loan remains outstanding as details emerge with FOI request by The Guardian

A $950,000 loan from the P.E.I. government to the Mi’kmaq Confederacy that funded the province’s controversial e-gaming scheme is still outstanding, but just who is responsible for repaying the money remains a mystery.

 “At this point in time it hasn’t been repaid so we’re still looking at it as an account receivable,” Economic Development Minister Heath MacDonald confirmed Friday.

When asked who would be responsible for repaying the money, MacDonald said the province is waiting for auditor general’s findings, following the completion of her ongoing investigation into the e-gaming file.

“We’re waiting to see what the response is from the auditor general for the next steps,” MacDonald said.

RELATED: P.E.I. auditor general says work started on e-gaming review

The Guardian has obtained a copy of the loan contract signed between the Mi’kmaq Confederacy of P.E.I. and Innovation P.E.I. through a freedom of information request.

The ‘offer to finance agreement’ is dated Dec. 12, 2011 and outlines the terms and conditions of the $950,000 loan.


It states the money was to be used “to finance the continued development and establishment of an interactive gaming regulatory and taxation model for the province of Prince Edward Island.”

The Mi’kmaq Confederacy had to put up security for the loan and was to be responsible for repayment and the annual interest rate of four per cent.

But the terms of repayment contain two unusual provisions – the Confederacy was not actually obliged to pay any money back, as only future gaming revenues would be used to repay the loan. The contract also stipulates the Confederacy would be off the hook if the e-gaming proposal, referred to as “the project” did not go ahead.

“In the event the project fails to launch or achieve economic feasibility and ceases operations voluntarily or otherwise, any amounts due to the lender under this loan, after the realization of security pursuant to paragraph 4.2, shall be void…” the loan document states.

“It is expressly agreed and understood by the borrower and the lender that any and all repayments, of both principal and interest, shall be by way of expenditures from the general revenues generated by the project.”

But since the project did not go ahead, it is unclear who is now responsible for this unpaid loan.

MacDonald did say government would table legislation in the coming weeks related to the province’s practices regarding loan write offs, and suggested this particular loan “might be addressed at that time.”

According to the loan document, the money was to be disbursed based on “satisfactory presentation of paid, detailed invoices evidencing actual costs incurred.”

But government redacted the entire contents of the page entitled ‘loan details’ that outlines details of these invoices, citing concerns releasing it could harm the business interests of the third party - the Mi’kmaq Confederacy.

The Guardian applied to the privacy commissioner for a review, which was granted, but a decision is not expected until January 2016.

The document also notes the money was disbursed in several increments – an advance of $50,000 was issued on Nov. 29, 2011; $700,000 was issued on Dec. 22, 2011; legal fees of $1,751 were dispersed on March 3, 2012; $100,000 was advanced on Dec. 18, 2012 and the final $100,000 was paid out on Jan. 7, 2013.

A total of $68,931 in interest is listed as having accrued between Oct. 1, 2011 and Dec. 31, 2013.

No payments on the principal or the interest owing on the e-gaming loan are documented, leaving the total amount still owing at over $1.02 million as of Dec. 31, 2013.

It is not known whether interest has continued to accumulate on this loan.

Government formally scrapped the e-gaming proposal on Feb 10, 2012 at a meeting at the government offices in Charlottetown.





Geographic location: Prince Edward Island, Charlottetown

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Recent comments

  • Regular Joe
    Regular Joe
    November 16, 2015 - 15:27

    Isn't this a nice pile of steaming crap .

  • Kim Petrie
    November 15, 2015 - 21:53

    The P.E.I. government (Robert Ghiz) asked lawyers, Gary Scales and Kevin Kiley, and a gaming committee, to consider if Scotchfort could e-game (like Kahnawake) ...it took them three years and a million dollars to determine that no, they could not. This is a professional negligence claim / they ran off scale due to a lack of appreciation of an area of law they have never practised in before. Their inability to avoid the CCC, and the understanding that sovereignty was not a notional legal claim, would have been a split second legal opinion for some. A short consideration of the law (Aboriginal law ) could be required for some who have no experience in the practice area.

      November 16, 2015 - 08:40

      Kim, it would be appreciated if you would expound on what it is you mean by their inability to understand the law. Just what laws are you referring to?

    • Kim Petrie
      November 16, 2015 - 09:41

      Wade had to send the file to taxation (a reduction of an account by the Prothonotary of the Supreme Court of P.E.I.) due to extreme overbilling. He didn't choose to seek recovery of the million dollar e-gaming legal accounts.

    • kp
      November 16, 2015 - 20:08

      Basic constitutional law; Aboriginal rights under s. 35(1) of the Constitution of Canada; Supreme Court of Canada common law judgments; international law (sovereignty); international Aboriginal law / covenants. This helps them more than I intended.

  • SlyFox
    November 15, 2015 - 20:16

    This is a very tricky situation that government has to deal with. It is not only Islander's following this case,there are other in Canada watching too. I can not see this being swept under the rug or other media might come in and do an indept report on this file. We had this done one before on this file and that left egg on some faces.Sure a few heads will roll but how does one judge when enough is enough to keep away prying eyes?

  • Kim Petrie
    November 15, 2015 - 18:38

    And, the Supreme Court of P.E.I. assigned Gordon Campbell to hear the case, a former senior partner of Scales and Ghiz. And, last Spring, Wade appointed John McQuaid as the province's interim conflicts commissioner. Scales, Ghiz, Jenkins & McQuaid. These are the only choices? They are keeping the file close. Obviously, someone who couldn't be there, invested secretly in the computer platform company.

  • Islander
    November 15, 2015 - 16:11

    Premier Wade was well advised to clean up the mess left behind by GHIZ and Sheridan. Before you can run and honest government of accountability and transparency you must deal with the issues that raked Island Taxpayers for millions. So far they think they are safe but if there is any Justice in sight we may see them squirm

    November 15, 2015 - 14:33

    It looks like the Mi'kmaq Confederacy was just a strawman for this venture. The real culprits were Ghiz and Sheridan and the Jenkins boys and their band of merry men. There is no need to wait for the Auditor's report, this loan is as dead as dead can be. It was never meant to be repaid by anyone the way it was structured. In a land of transparency, this would constitute fraud, but, this being PEI, no one will swing for this and in a couple of months,they all hope all will be forgotten, except that they misjudged sharklike Paul Maine, who has them missing a lot of sleep lately as the groups protectors, Ghiz and Sheridan, are not available to bail them out.This was never about the Mi'kmaq. It will be interesting to see how MacLauchlin will spin this to exonerate the perpetrators of this fiasco.

  • Angus
    November 15, 2015 - 11:40

    C'mon now - this is government, this is PEI are any of you really surprised. Do any of you doubt all kinds of insiders profited on this deal? And what will you do about it? Absolutely nothing! PEI is a million acre sheep farm and Islanders get sheared every day and just suck it up, while standing around waiting for the next guy with the clippers to show up. And if there was ever any decent investigative journalists around, they're long gone. So there'll be no help from the media in exposing any fiscal shennanigans.

  • Indigo
    November 15, 2015 - 10:25

    What an insult to the people of PEI. Ghiz was a disaster, and to think he may end up being given a lifeline by Trudeau is truly disturbing.

  • Observer
    November 15, 2015 - 10:20

    Kudos to whom ever wrote up that contract. Amazing that our politicians and bureaucrats could agree to this on behalf of the taxpayers. Thanks a lot, folks. Now let us see a detailed account of who got the money. Since it is gone and never to be seen again, let us at least see who screwed us out of it. If possible let us hold anybody to account that we can, including the Ghiz and his cronies. Let us be sure that those folks never get their hands on any more of our tax money Hear us ,Wade, - no more government contracts to LeClair, Mason and the rest of that crew of mutts. As well, it is high time to clean out the deputies that took part.

  • G. Arsenault
    November 15, 2015 - 10:18

    Simply. Those that were in Government when this was put into action and are now receiving a pension. Those pensions should be halted and diverted to pay this amount. Upon complete payment the pensions can be returned to those ex Government employees. Elected officials are still accountable for their actions. And this idea was stupid from the start.

  • de udder guy
    November 15, 2015 - 10:04

    I am really questioning the culture of deceit and wilful ignorance on PEI and if its so ingrained that people have tuned it out. An obvious attempt to use taxpayers money through an intermediary to fund the greed of a select few individuals who ignored every ethical principle on the planet and showed a complete disregard for their duties as elected officials. Stunning really.

  • Something Stinks Here
    November 15, 2015 - 09:47

    If the government scrapped the idea on Feb 10, 2012, why was $100,000 paid out on Jan 7, 2013?

  • Hazel
    November 15, 2015 - 09:41

    As this story rolls out I think we will come to see the Mi'kMaq Confederacy got used big time by the government. There has to be a reason why the money was funneled through them.

      November 16, 2015 - 08:19

      They didn't get used, they were part and parcel in this scheme.

  • eyeonthings
    November 15, 2015 - 09:29

    What a sweet deal between the PEI Gov't & the Mi'kmaq Confederacy! And all behind closed doors! No wonder Ghiz & Sheridan et all scurried away tout suite with tails between legs! They blew away PEI taxpayer's money on this risky business - & then vamoosed before the deal got out! And yet the same gov't wouldn't fail to take the roof out over someone who lost every source of income & had no money to pay property taxes! What a shameful lot of scumbags run some governments! Will Sheridan get to keep his illgotten gain? Or will someone with a sense of decenct attempt to make this right with taxpayers of PEI? A good project for someone like Jamie Fox to bring up in the House! I look forward to this!

  • Wally Blouin
    November 15, 2015 - 07:37

    I wonder who on the government side got the kickback. I guess Quebec is not alone when it comes to crooked politicians

  • Peter
    November 15, 2015 - 06:46

    But the terms of repayment contain two unusual provisions – the Confederacy was not actually obliged to pay any money back, as only future gaming revenues would be used to repay the loan. The contract also stipulates the Confederacy would be off the hook if the e-gaming proposal, referred to as “the project” did not go ahead. Geeez ... it's only $950K. They just save $80K by screwing commissionaires out of their jobs!

    • Cromwell
      November 15, 2015 - 12:30

      HealthPEI (and hence, the PEI government) didn't save $80,000 by sacrificing the Hospital commissionaires contract to Paladin. Much of the possible savings in having lower-paid workers in these positions (Paladin states it is paying them $2/hour less) is mostly absorbed by the overhead charges that Paladin charges to administer the contract. There are likely some savings in non-direct costs, such as benefits, but the Government will be loathe to state what these savings are.