Liberals were given inaccurate picture of shipyard deal, Boudreau says

The Gallant Liberals are offering their most detailed explanation so far for why they're blaming the previous Progressive Conservative government for the problems at a shipyard in Bas-Caraquet.

Victor Boudreau, the minister responsible for the Regional Development Corp., says the New Brunswick Naval Centre was "destined for difficulty" because of the funding model put in place by the Tories.

Boudreau also says the details of that model were kept secret from the new Liberal government that took office in 2014.

The Gallant government approved the funding based on misleading information, he says.

"There were inaccuracies in the way this file was put together and presented to us when we came to government," Boudreau told CBC News Monday.

• New Brunswick shipyard bailout draws heat over cost and risk
• N.B. government to take over troubled Naval Centre

Boudreau says based on documents prepared for the cabinet, he believed it was up to Quebec company Groupe Ocan to invest $13 million up front for a new drydock to be built at the site.

"I remember being under the impression the entire $13 million was Groupe Ocan's responsibility," he said.

But after the Liberals gave their approval, they learned "that's not the way the entire deal had been structured."

The agreement actually called for the Naval Centre itself to borrow the $13 million first, with Groupe Ocan paying it that amount later.

We've come to the realization that not all of this information was part of the package that was presented to us as a new government.- Victor Boudreau

"Government made a decision based on that, and with time that's gone on, and as we've looked into this file,we've come to the realization that not all of this information was part of the package that was presented to us as a new government," Boudreau said.

Because the Naval Centre is a non-profit corporation created by two municipalities whose ability to borrow money is limited by law, that arrangement "probably wasn't realistic," he said.

The centre was founded by the Town of Caraquet and the Village of Bas-Caraquet.

The municipalities were also expected to borrow $4 million to contribute to a $10-million infrastructure upgrade at the site, even though that was beyond their means as well, Boudreau said.

Plans to take ownership

The province announced on Saturday it plans to take over ownership of the shipyard in an effort to resolve a cash crunch at the facility, at a possible total cost of $38 million. The Liberals hope Ottawa will contribute some of that money.

Last December, Groupe Ocan stopped work on the drydock it had been building for the naval centre, citing non-payment of some of its bills. It also laid off 28 employees.

Several of the centre's other suppliers have also filed liens over non-payment.

Boudreau's comments about misleading information being presented to the Liberal cabinet are consistent with an unusual change in how the project was initially described by the Liberals.

Last May, when they announced their $4 million in funding, a government press release said Groupe Ocan "will invest" in building the drydock.

But last December, company officials said that reference was wrong and it was the Naval Centre that was required to put up the money at first.

Boudreau would not identify which civil servants at RDC were responsible for what he calls the inaccurate cabinet documents.

"I'm not going to start pointing fingers," he said.

The deputy minister at RDC at the time the deal was put together was Denis Caron, who left the government last year to become the chief executive officer of the Port of Belledune. Caron could not immediately be reached for comment Monday.

Municipalities not 'private sector'

On the weekend, interim PC Leader Bruce Fitch, who was the minister responsible for the Alward government's job-creation agency, Invest New Brunswick, at the time, defended the Tory handling of the file.

The Alward government announced an initial agreement to "consider" funding the Naval Centre in August 2014, just before the start of the provincial election campaign.

"It made sense because the private sector was going to invest a significant amount of money," Fitch said.

"We had it set up that the private sector would invest the money, the municipalities in the area would invest the money. That would have been a huge difference."

But he said because the Gallant government "didn't like that we were involved in that ... their support got sidetracked."

Boudreau said Monday the private sector was never an investor in the centre under the PC deal, but was a customer.

"To say it's the private sector that should have played a role here I don't think the municipalities of Caraquet and Bas-Caraquet are considered private sector," he said.

"To expect the two municipalities to front all the money to make this happen is a mistake I think the previous government made."