Nova Scotia Jobs Fund slammed in Jacques Lapointe's report

Nova Scotia's auditor general has issued a scathing report on the way the former New Democratic government handed over assistance to businesses with the "poorly managed" Nova Scotia Jobs Fund.

In his latest report released Wednesday, Jacques Lapointe found problems with 10 files from cabinet-controlled Jobs Fund, previously known as the Industrial Expansion Fund.

Three of the 10 files did not have any financial information for cabinet ministers, even though they dealt with loans of about $500 million. That includes the biggest handout of all: a $260-million potentially forgivable loan given to Irving Shipbuilding.

"For five of seven projects tested, the department did not know whether the projects were completed or if the money was spent as intended," Lapointe said in a statement.

In briefing reporters on his findings, Lapointe put names to projects where he found deficiencies in the process loans and grants approved by the Darrell Dexter's cabinet over the past two years.

Lapointe said a $25 million partially repayable loan to Cooke Aquaculture approved in June 2012 had no security, would provide "negligible" net economic benefit and can be spent outside the province.

The auditor general also said the Jobs Fund board expressed concerns over two projects approved by cabinet: $66.5 million to the Pacific West Corporation, which owns Port Hawkesbury Paper, and $16.5 million to Chorus Aviation operator of Jazz Aviation.

Lapointe said Irving Shipbuilding had not put up enough security to cover the $304 million a $260-million potentially forgivable loan and a $44-million interest bearing repayable loan in assistance it had been offered. Irving Shipbuilding was one of three companies that provided no financial statements to government.

"Files are consistently missing key components such as funding applications and supporting documents, financial analysis, analysis of economic benefit," said Lapointe.

"Essentially no financial analysis was completed."

'Our worst fears'

Nova Scotia's newly-elected Liberal government said the report confirmed their "worst fears."

"The previous government, when it comes to spending taxpayers' money, was doing so in a reckless fashion," said Michel Samson, the Minister of Economic and Rural Development and Tourism.

Samson said the loans and grants were quarterbacked entirely by then Premier Darrell Dexter from his office, known in Halifax bureaucratic circles as One Government Place.

"The deals that have been identified by the auditor general were not negotiated by staff of the Department of Economic and Rural Development and Tourism, they were negotiated at One Government Place," Samson told reporters.

Companies respond

Cooke Aquaculture Inc., which to date has received $18 million of the $25 million committed, said the company still intends to spend $125 million to expand its operations in Nova Scotia.

"We have already created a significant number of new positions, both in the Digby and Shelburne areas, with more that 160 direct employees now on our Nova Scotia payroll," Nell Halse, a spokeswoman for Cooke Aquaculture, said in an emailed statement to CBC News.

"We had to spend money in order to receive the provisionally repayable funds. As required, we provided a listing of invoices to the province before these funds were received."

She said the money has been spent in Nova Scotia.

Meanwhile, Irving Shipbuilding said it had met all the requirements of its loan agreement and would continue to do so.

"The $260-million interest-bearing loan is forgivable if, and only if, employment targets are met. A $44-million interest-bearing, repayable loan was also made available to Irving Shipbuilding to assist with our value proposition activities, which will further invest in the marine industry here in Nova Scotia and across Canada this loan has not yet been accessed," Deborah Page, a spokeswoman for Irving Shipbuilding, wrote in an email.

"The company is very aware of its responsibilities under this funding arrangement with the province and fully intends to meet all of its associated obligations and targets."