Debates of October 15, 2004 (day 21)

Thank you. I’m just getting help here. Thanks a lot for your patience. Stand down the clauses and go down to schedule 1, page 3. Mr. Braden.

Thank you, Mr. Chairman. The discussion that my colleagues and the Ministers have had has helped to illustrate some of the general aspects of how we monitor and manage the flow of contributions and loans to all sorts of different organizations in the NWT. It’s helpful, of course, and positive to see that we’ve taken steps to tighten up the way we manage these things and that hopefully there will be less and less of this kind of thing happening. I think it’s useful, for the record, to put some detail around a couple of these cases just to illustrate and to probe what went wrong in some cases, and why we have had to make these changes.

On schedule 1, Mr. Chairman, item 2, regarding the NWT Development Corporation, they are applying for a write-off of $150,000 in unrealizable preferred shares In Nats’enelu Limited. Mr. Chairman, I would like to ask the Minister a few questions about this amount of money to this corporation. Over what period of time was the NWT Development Corporation involved in supporting Nats’enelu Limited? Thank you.

Thank you, Mr. Braden. Minister Roland.

Thank you, Mr. Chairman. Mr. Chairman, the arrangement or the requests and working with the NWT Development Corporation began in March of 1999. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Okay. So it started in March of 1999 and up to what period? I am looking for the time frame here. Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. The operation concluded, seized to exist, in March of 2002 or approximately that time. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Thank you, Mr. Chairman. Were there any other contributions or assistance from other agencies of this government to this business? Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. I better correct myself. Initially, it was August of 2002 that the relationship had changed. There were other funds provided through other sources within the government and the BCC was involved in this as well to the tune of approximately $100,000. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Thank you, Mr. Chairman. There was no other agency involved and the total amount of GNWT contribution to Nats’enelu was then $250,000. I just want to confirm those numbers so far. Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. No, the total amount owing to the government was approximately $350,000. The first amount was for $150,000 in 1999 and then in 2001, through the Development Corporation, it was another $100,000 and then a further $100,000 from BCC. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Okay. So we are up into several hundred thousand dollars of contributions to this organization. I guess, Mr. Chairman, I would like to ask was a substantial amount of this paid back or recovered through the organization? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. No, there wasn’t a substantial amount repaid. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Mr. Chairman, then to add some numbers up here, we see that we have a total of $350,000 that was advanced to Nats’enelu from the Business Credit Corporation and the Development Corporation, and in addition about $430,000 was provided through other departments. So we have almost $800,000 by some accounting here to Nats’enelu, but we are able to go after $150,000. Do I have that right, Mr. Chairman?

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the total amount is $350,000; $150,000 of that was in preferred shares and that is the amount that we are accounting for through this write-off. We are no longer able to count on those preferred shares as an asset. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Thanks, Mr. Chairman. This is a very difficult forum in which to exchange this kind of information and I am not going to drill down into this any further. What I wanted to do, Mr. Chairman, for the record and the people who are looking and listening to this kind of thing, is to show that over the course of time, the Minister has suggested about three years, maybe four, that this government was involved in some fairly significant contributions to a business. Over the course of time, we kept putting money into something that really wasn’t showing it could get through the start-up difficulties. So there was a failure here, and a regrettable one at that, because Nats’enelu put out a tremendous product. It’s regrettable that it didn’t go. What we are involved in here is looking at how we assess and the kind of decision-making process we have for businesses. It seems that perhaps in this case here, over a period of several years, we were just trying to help a business hold on that really didn’t have a good plan going for it from the start, perhaps hadn’t put together all the ingredients that it really needed.

So our ability to assess and properly support and fund a business was really not quite up to snuff. We’ve lost a fair amount of money and the business has failed. So as I say, Mr. Chairman, this is illustrative of some shortcomings that we have had in our business support system and we have an upcoming fairly major changeover to our whole support to business support, so some of these things may be addressed in there. I have no other questions on schedule 1, Mr. Chairman.

Thank you, Mr. Braden. Mr. Roland, would you like to comment?

Thank you, Mr. Chairman. The member is right. As we go forward on the basis of some of the work that’s being done in RWED now, some of these deficiencies and concerns raised in the past and at this time, as well, are being considered as we go forward. Just to highlight the fact that in the next bill we are going to be dealing with accounts for the next $100,000 through the Development Corporation that we are forgiving in the next piece, and potentially there are other things to come. It is an area of concern, it has been for awhile, but there is a certain amount of risk that we do realize and accept when we do take on ventures in the smaller communities across the North. We know that your traditional banking institutions would not go in those places, so we have to try to come up with a program to try and encourage some development. We’ve heard it in the past and as well today, and through this process we’re going to need to review how we go forward on this and much of that will be taken into consideration as we go forward in review of those economic programs that we hold as a government. Thank you.

Thank you, Mr. Minister. General comments for schedule 1. No further comments. Schedule 1. Agreed?

Agreed.

Go on to page 5, schedule 2. Mr. Braden.

Thank you, Mr. Chairman. To item number 3 on schedule 2, Northern Addictions Services. Again I’d like to see if we can track some of the history and the layers that there may be in this particular request for a write-off of almost $120,000. I think it warrants some attention at committee level, Mr. Chairman. This is through the Department of Health and Social Services. Could the Minister advise if there was a cumulative history here for this $120,000? Could he advise on some of that? Thank you.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, there is a long history with this Northern Addictions Services program and non-profit organization that tried to have services provided to residents and we don’t have all of that detail here. On the specific numbers dealing with the Department of Health and Social Services, about $112,000 was initially issued out in the 1999-2000 year for a utilization plan. As well, there was a further amount in 1999-2000 of approximately $7,200 for training initiatives. There has been no accounting for that. That’s why we’re at the stage we are, and the organization is no longer in existence, I guess we can say. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Northern Addictions Services indeed had a troubled history. Would the Minister be able to advise, with this organization, what their history of monitoring and accounting and providing for other government contributions? I know there were substantial contributions that went into this organization. Did they have a good history? Was this an exception? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, I don’t have that detail with me with regard to the Department of Health and Social Services and the work they’ve undertaken in trying to get an accounting for that money. What I can say is, once the file was forwarded to us in FMBS, there were actions taken and initiated to try and collect on the funds, but our efforts came to no gain for us and that’s why we’re at this stage today. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Mr. Chairman, as far as the documentation that the government would require when it looks at these applications, would there normally be a list of the directors of an organization, the financial officers? Is there any kind of backup to handing this money out? Is there an agreement in place? Are they contracted to provide the justification and the reporting on it? I guess what I’m looking for here, Mr. Chairman, is how solid is our paperwork, if you will, and our contracting method when we make these kinds of contributions to organizations? All of it is in good faith. But there is an onus to look after the taxpayers’ investment, if you will? I just want to determine how tight our process is on this. Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. First of all I would like to state that we are, as a government, looking at tightening up how we deal with those that would come requesting funds. The process that would have been used, whether it was the application process, a lot of the funds that are available to groups in the Territories would be based on applications being made, proposals being put forward and a structure of how it would operate, including board members, the program that they were going to operate, and what results they were hoping to achieve. So going into it there would be a substantial amount of work done in justifying why the money should go as they’re being requested.

The problem we find from time to time is that as things go forward and as boards change and as staff changes, some of that accounting internally gets lost and when we want a report to finalize what’s been done, what’s been achieved, how that money has been spent, if it’s been spent in accordance with what the plan was, that falls from time to time between the cracks of those organizations. Then we have to step in, as the departments initially can’t get the information requested and then hands the file over to us. We end up stepping in from the collections side and try to secure those funds that are outstanding.

So there is a fairly onerous process when an application is being put in and looked at by the departments. Now, it’s not a template that every department uses depending on the program, the amount of money being requested, but it is something that for any money being requested that we would want to see a plan of how that is going to be spent and if it fits the criteria of the contribution that can be made. So there is a fairly substantial process in going to get the money. What we do find from time to time -- and this is where we’re at today -- is that in accounting for how those dollars were spent we have some difficulties. That is more on the organization side, the non-profit agency, and we have to go from there and we become involved as FMBS and try to find those that are out there that were board members. We make calls, send letters and try to get a response to the situation. In this case we have not had a successful response. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Thank you. Those are acceptable answers. In this particular case the Minister advised the committee that of this $119,651, $12,391 was for a “utilization plan.” I’m sorry, Mr. Chairman, $112,000. That’s a lot of money. That’s a big piece of work, and yet it’s just gone? It’s never performed? Even way back then, four years ago, when obviously our processes weren’t as tight as we would like them to be, that’s still a big pile of money to lose. At what level within the department should we be going back and saying where were you guys? Was someone asleep at the switch? I am digging up accountability, Mr. Chairman. I think we need to, as a committee, be on our toes here. When we see areas where accountability should be called up, then we should do so, and that’s what I am looking for here.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Mr. Chairman. It is something that we have stated in this government that we intend to be more vigilant and accountable for the dollars that are spent that are put out there. We can give a number of examples. As I stated earlier, I am bringing a paper to my FMB colleagues for accountability and a sense of directors that are on boards and requesting funds from the government.

Another big piece we have done here, since becoming elected, is put into practice the third-party accountability framework that is now being rolled out. That, as well, enhances how we see this flowing as a government and how funds are used from the government. So we, as the 15th Assembly, have started to put into practice what we feel is a stronger way of doing business and accounting for the dollars being spent by the government. So we have started putting that in place.

As for the money just being gone, there were activities carried on. There were services provided, but, unfortunately, things fell between the cracks when it came to an actual accounting on how things were spent, how much was on wages, how much on O and M, how much on having clients come into a facility. Unfortunately, that fell through. Without more detail from the Department of Health and Social Services at this time, I can’t say all that money just went to waste. There were individuals who went through a program. How much success was there? That’s the unfortunate part. We don’t have an accounting for it at this time. The interpretation could be that money went out and was gone, but we know that there was a service provided for a time there. Unfortunately, the accountability portion of the report did not get done. So we are tightening up that system as we go forward as the 15th Assembly. Thank you.

Thank you, Mr. Roland. Schedule 2, agreed?

Agreed.

Mr. Braden.

Thank you, Mr. Chairman. Item numbers 8 and 9, I would like to talk about these two together. They refer to debts owed by the Metis Heritage Association and the Metis Nation of the Northwest Territories through accounts of the Department of Education, Culture and Employment. They total about $120,000. The first one for the Metis Heritage Association is for $84,000, and to the Metis Nation of $35,000. The reason that I would like to look at these two in combination, Mr. Chairman, is they occur in the same time frame, 1998 to 2001, those fiscal years. The information we have so far suggested that they are largely for related purposes, cultural and language purposes. There is a similarity between some of the previous files I have been asking about and that my colleague, Mr. Menicoche, talked about, and that is the cumulative process that we’ve had in some files here of continuing to advance, loan or contribute money to organizations even though past accounting has not been there.

Could I start asking on these two whether the Minister could provide, for the record, a little bit more information about the purpose of the contributions for items 8 and 9? Thank you, Mr. Chairman.