Karen Mackenzie
Northern News Services
Published Monday, November 12, 2007

NUNAVUT - The Government of Nunavut is taking a long, hard look at the operations of the Nunavut Business Credit Corporation in light of a damning report by Canada's auditor general.

The government has also transferred the lending agency's records to the RCMP for further investigation.

Minister of Finance David Simailak appointed an interim board Nov. 9 to take over the Nunavut Business Credit Corporation's (NBCC) activities after its chair, vice-chair and one member resigned.

Although the board is now free to meet again, its operation will be further scrutinized as the GN's Standing Committee on Government Operations and Accountability prepares to meet with auditor general Sheila Fraser on Nov. 27.

The audit, which examined NBCC's conduct over the 2005-2006 fiscal year, pointed to "a serious breakdown of basic financial controls."

Released on Nov. 5, it found that swaths of information pertaining to the almost $18 million in loans issued by NBCC during that time had been deleted or never filed, and that funds disbursed may not have been used for approved purposes.

In some cases, staff released loans to borrowers before they had been approved.

In one incident, $15,000 was disbursed to a borrower twice, because it was not properly documented.

At Fraser's upcoming presentation, the standing committee will question some NBCC and government officials as witnesses.

Committee chair and Iqaluit MLA Hunter Tootoo said they have not determined who that will be.

Tootoo said he was not surprised that there were problems with the report, "but I was very surprised at the state of things."

The Office of the Auditor General had previously noted irregularities with NBCC's operations in its reports in 2001, 2004 and 2005.

Recently, the Office of the Auditor General refused to provide an official opinion on NBCC's 2005-2006 fiscal year because NBCC's bookkeeping was too shoddy.

NBCC is a Cape Dorset-based Crown corporation which provides loans to small Nunavut businesses that have trouble getting financing from regular institutions.

At the legislative assembly on Nov. 2, Tootoo and Rankin Inlet MLA Tagak Curley both questioned why the government took so long to take action on the matter.

In response, Simailak admitted that, looking back, the government "should have overhauled the portfolios of NBCC."

According to one government representative only three businesses - two in the Kitikmeot and one in the Baffin region - currently have active files with the NBCC.

As none were yet ready to go before the board for approval, they were not adversely affected, said the representative.

Bob Long, president of the Baffin Regional Chamber of Commerce, said his organization is very concerned about the operations of NBCC.

"It's a valuable tool for the start-up and expansion of Nunavut Businesses," he said, adding that while the government was slow to come to the conclusion, it should be applauded for its decisive action. "The BRCC is willing to help in any way we can by providing any input into the restructuring of NBCC," he said.

Peter Ma has been named the NBCC's interim chair. Also appointed to a one-year term on the board are David Omilgoitok, Markus Weber and Aluki Rojas.