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.
©NIGEL ARMSTRONG/THE GUARDIAN
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.
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.