Auditor slams corporations
Bad investments, little performance reporting, not enough detail
FACT FILE
                   $s invested    Accumulated loss
NCS-TV.................650,000.........491,000
Marathon Waterworks....437,401.........358,430
M.S. Norweta...........200,311.........535,129
Arctic Red River.......100,000.........129,000
Source: Report of the Auditor General to the Northwest Territories Legislative Assembly

by Richard Gleeson
Northern News Services

NNSL (June 04 /97) - Federal auditors say territorial business development and housing corporations have poorly defined goals and fail to achieve most of the goals they do define.

Those were two of the concerns the auditor general of Canada expressed with GNWT financial statements for 1995-96. The comments were included in a report tabled in the legislature last week.

Almost all new businesses the NWT Development Corporation (DevCorp) investment advisers touched turned to lead.

The corporation provides private businesses with funding in an effort to stimulate the Northern economy and create jobs.

Under the act that created it, DevCorp is to invest only in new businesses expected to start making a profit within three years. The auditor's report noted five of the corporation's seven venture investments were money losers. All had been in business for at least three years.

The review of DevCorp's accountability was a follow-up to the previous year's audit, which said no territorial corporation did a good enough job reporting its performance. Territorial law requires annual filing of performance reports.

DevCorp also subsidizes operating costs for Northern businesses in an effort to help create jobs. The Financial Management Board has said the corporation should pay businesses no more than $10,000 for each job created.

Though DevCorp does not keep track of how close it comes to meeting this target, the auditor general's report indicates not well at all in most cases.

In four instances, DevCorp gave companies more than they paid out in wages. Northern Forest Products topped the list. It received $2.15 from DevCorp for every dollar it paid in wages.

Every one of the 18 companies that received subsidies lost money. Together they lost more than $3.5 million in 1995-96.

The report reveals a host of difficulties with the NWT Housing Corporation, among them:

  • it paid community housing organizations more than $85 million to cover operation, maintenance and management of social housing during 1995-96, but could not say how the money was spent
  • a large percentage of mortgages it provides are in arrears in spite of large subsidies to homeowners
  • the process for collecting mortgage arrears is woefully inadequate

The report also notes the government does not account for any money they may have to pay for underpaying female employees in the past. The Union of Northern Workers has estimated the government underpaid female employees to the tune of $70 million.

Government lawyers are currently trying to prevent a human rights tribunal from ruling on a complaint, brought by the union, to the Canadian Human Rights Commission. Two federal courts have said the commission has the authority to hear and force settlement of the complaint.