February 4th, 2000
Shovelgate: Money for nothing
The federal Liberals gave $14 million to 32 companies to create jobs. Human Resources files show not a single job was created as a result.
Jack
Aubry
The Ottawa Citizen
· As much as $14 million in federal grants shelled out through the government's Transitional Jobs Fund created no new jobs, according to a Human Resources Department report obtained by the Citizen.
· Some of the companies that created no new jobs, despite receiving grant money between 1996 and 1999, revealed bankruptcies which had occurred after the grants were issued.
· One logging company in Camperville, Man., which received a $56,000 grant and created no jobs, went bankrupt in 1997 shortly after receiving the jobs-fund money.
· Reform MP Maurice Vellacott, his party's critic on human resources, said: "It shows how fly-by-night, one-day wonders took advantage of the department. I've even heard stories of shell companies being created to suck in the money. "It goes without saying that the checks and balances in the program were totally inadequate."
· Economically strapped Quebec dominated the program, receiving about $97.5 million in grants. The province, which has less than a quarter of the country's population, received about one-third of the money from the program because of its high unemployment.
FULL STORY :-
February 4th, 2000
Shovelgate: Money for nothing
The federal Liberals gave $14 million to 32 companies to create jobs. Human Resources files show not a single job was created as a result.
Jack
Aubry
The Ottawa Citizen
Fred
Chartrand, The Canadian Press / Prime Minister Jean Chretien continued
yesterday to downplay the significance of mismanagement in the Human Resources Department.
He said the mounting scandal is a creation of a competitive press.
As much as $14 million in federal grants shelled out through the government's Transitional Jobs Fund created no new jobs, according to a Human Resources Department report obtained by the Citizen.
An analysis of the report shows 26 grants worth a total of $12.3 million created no direct jobs after the smoke had cleared. In another six cases on the list, worth a combined $1.6 million, the space for new jobs created has been left blank by the department, indicating it was still trying to determine the result of the grant.
Inquiries made this week by the Citizen into some of the companies that created no new jobs despite receiving grant money between 1996 and 1999 revealed bankruptcies had occurred after the grants were issued.
This supports one of the major findings of a recent audit of the department that found 97 per cent of the files reviewed showed no evidence the government had checked for outstanding debt. As well, two-thirds of the files, which included ones from the jobs fund, did not contain an analysis and/or rationale for recommending the project.
About 15 per cent of the audited projects did not contain an application, while 72 per cent of the remaining ones lacked a cash-flow forecast.
The audit, which found major problems in about $1 billion worth of programs, has resulted in calls for the resignation of Human Resources Minister Jane Stewart, International Trade Minister Pierre Pettigrew (who preceded Ms. Stewart) and Mel Cappe, the Clerk of the Privy Council and former deputy minister of the department.
One logging company in Camperville, Man., which received a $56,000 grant and created no jobs, went bankrupt in 1997 shortly after receiving the jobs-fund money. The receptionist at the Camperville town council office said the owner could not be reached for comment since he no longer could afford a telephone at his home.
Reform MP Maurice Vellacott, his party's critic on human resources, said the list, dated Nov. 29, 1999, confirms that the jobs fund was inadequately managed by the government.
"It shows how fly-by-night, one-day wonders took advantage of the
department. I've even heard stories of shell companies being created to suck in
the money," said Mr. Vellacott.
"It goes without saying that the checks and balances in the program were totally inadequate."
The Transitional Jobs Fund, which folded in April 1999 to become the Canada Jobs Fund, was to create long-term, sustainable jobs in high-unemployment areas "that have good prospects for future growth," and it obviously failed in a lot of cases.
Other companies that went bankrupt before creating new jobs include the Faro mine in the Yukon and a company called Pro-Image Ken Graetz (which received $65,000) in Montreal. Other companies with nothing to show for the grant money include Telephonie du Quebec ($606,520) and Vigoex International ($210,000), which are no longer listed in the Quebec telephone directory.
The list of 1,094 approved grants worth $284 million over three years shows that economically strapped Quebec dominated the program, receiving about $97.5 million in grants.
The province, which has less than a quarter of the country's population, received about one-third of the money from the program because of its high unemployment.
The Transitional Jobs Fund was the subject of an RCMP investigation after the 1997 election, when four counts of influence-peddling were laid against Quebec federal Liberal organizer Pierre Corbeil.
Mr. Corbeil was fined $34,500 after pleading guilty. The RCMP claimed Mr. Corbeil had tried to collect up to $10,000 from firms that had applied for job grants.
More questions about the fund surfaced when the National Post reported that a Quebec businessman who bought a hotel from Prime Minister Jean Chretien and his business partners received $164,000 under the program.
Other areas with high unemployment, such as Newfoundland, with $47.4 million in grants, and Nova Scotia, with $32 million, also fared well. Meanwhile, Ontario and British Columbia landed only $33.6 million and $17.6 million, respectively.
Included in the list of projects that failed to create new jobs, the Anvil Range Mining Corporation received $900,000 before the Faro mine in the Yukon closed in late 1997, leaving more than 500 miners out of work. The mine has left behind debts of more than $50 million after the world market for zinc died.
The list also shows $250,000 in grant money going to now-bankrupt Sonax Furniture Manufacturing in Osoyoos, B.C.. Paul Pedersen, the former owner, said he was surprised at how "easy and quick" it was to get the grant money for his failing company.
"It usually takes forever, so I was quite surprised," said Mr. Pedersen, who operated the business for 13 years and lost about $2 million in the bankruptcy in 1998.
"The money saved jobs, but just not long enough. It did help keep us open an extra year."
One major grant in Ontario for $1.3 million went to Canadian Aerospace Group in Burlington. The list shows that it produced no new direct jobs.
A statement released yesterday to the Citizen said the company received approval for funding of up to $2.7 million under the Transitional Jobs Fund and another Human Resources program, the Targeted Wage Subsidy Program.
"Of this total amount, less than 40 per cent was actually received before our company voluntarily suspended the contracts," said the statement. It said the funding was to create new employment in North Bay, subsidizing wages for 29 employees.
It said the program was suspended by Aerospace in early 1999 when it became apparent that "suitable long-term building leases could not be consummated with the airport landlord." The company says it relocated to another place, without specifying where.
It also says that it "endured stringent controls and conditions" from the department and they consider the project a success.
In some cases, department officials say the list shows no jobs created by the fund because grants were provided to save jobs in a struggling company. An example was the re-opening of a $135-million truck plant in Sainte-Therese, Que.
The federal government pitched in about $3 million in job grant money while the province provided the bulk of government support with about $50 million.
Paccar Inc. reopened with 325 employees, 575 fewer than it employed before the shutdown.