NWT
Almost one in every five dollars the Northwest Territories Business Development and Investment Corporation (BDIC) loans out is considered impaired.

BDIC headquarters in Yellowknife on March 19. The organization has come under fire recently for its high percentage of impaired loans and the poor performance of its subsidiaries. - Walter Strong/NNSL photo

The organization's subsidiaries continue to lose money. And it has recently been slammed in an independent review for having too many managers and spending too much money delivering its programs.

How does Industry, Tourism and Investment Minister David Ramsay feel about it all?

"Given the work that the BDIC does, it's not that bad."

Ten years ago, the investment corporation was established by the GNWT to promote small business development in the territory -- especially in smaller communities -- through loans and investment. In March 2013, a review of the crown corporation was completed by Yellowknife accounting firms Biswanath Chakrabarty & Co. CGA, Mackay LLP, as well as Toronto-based Cathaxis Consulting.

A recently released 104-page review found multiple problems. The BDIC Program Review Report said the performances of BDIC's subsidiaries was poor, with sales and profitability both steadily declining and only two new ones being established since the organization's inception. Since the purpose of subsidiaries was to develop the economy and employment opportunities in communities and eventually become self-sustained, this small number showed this objective was "not been fully met".

The report also took note of BDIC's high percentage of impaired loans. As of March 14, 2014, the organization's total loan portfolio amounted to $42,614,647. However, the amount of impaired loans was $7,982,748, a staggering 18.7 per cent. When asked about this number, Ramsay told News/North this was part of the corporation's reality.

"Given the work that the BDIC does and the loans that it makes, we are going to have a level of impairment," he said.

"You're going to have to take risks when you're trying to develop economies in communities outside of Yellowknife. You are going to get impaired loans."

While the report acknowledged BDIC is a lender of last resort, it said the investment corporation's ratio of impaired loans was much higher than most of the government-owned lending organizations. The example they used was Farm Credit Canada, which only had about 1.278 per cent of its loans in its 2012-2013 financial statements listed as impaired. This is 14.6 times fewer than BDIC's amount.

Ramsay argued he had seen numbers from other provincial or territorial lending agencies in similar positions that put BDIC's situation in context.

"That number stacks up favourable with other institutions that provide loans," he said.

But Mike Bradshaw, executive director of the Northwest Territories Chamber of Commerce, said the situation has become unacceptable. He acknowledged the role of a crown corporation is different than a traditional or commercial lender and that BDIC has a role between assisting the economy and helping grow small businesses in communities.

But that didn't excuse what he calls poor business practices.

"I think somebody needs to make a decision about how much money they're going to make in losing propositions," he said. "At some point you have to stop throwing good money after bad."

While Ramsay admitted that the amount impaired loans and number of management needed to be addressed, he said it would not be through any dramatic changes in the near term.

"The only way to move forward is by working with the BDIC and the board that's in place with these issues," he said. "You'll have to stay tuned, I guess, to what happens."