Auditor General Says Quebec Made $ 68 Million in Loans to Non-Qualifying Businesses

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At least 10 distressed companies were able to receive loans from the Quebec government totaling $ 68 million last year, even if they did not fully meet the required criteria to do so, according to the province’s annual auditor general report released Wednesday. .

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The management of the loan program, created and Overseen by Quebec’s Economy Minister Pierre Fitzgibbon in an effort to support businesses affected by the pandemic, it was inadequate and lacked transparency, Auditor General Guylaine Leclerc wrote in his communication.

At the start of the COVID-19 crisis, the Legault government set aside $ 3 billion of public funds to fund a pair of programs to provide temporary help to businesses facing a cash crisis due to the pandemic: the Concerted Action Program. for companies (PACTE) and the Emergency Assistance Program for Small and Medium Enterprises (PAUPME).

The auditor general’s office examined 22 loans or loan guarantees tied to the PACTE program and found that approximately half of them did not meet the government’s criteria for financial assistance at all.

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A clause in the internal management of the PACTE program allowed Fitzgibbon to grant itself the power to adjust criteria “according to the needs of the file”, allowing it to grant loans to companies that did not qualify. The auditor general’s office found that is precisely what happened in at least 10 cases.

The PACTE program was managed by Investissement Québec, an agency that responds to Fitzgibbon. In some cases, loans were made to companies that had not shown any profitability or were experiencing financial problems before the onset of the pandemic. At least one company that received government assistance under the PACTE program filed for bankruptcy shortly thereafter.

The companies involved were not identified in Leclerc’s report. Companies that did not meet government criteria for the program were turned away when they approached Investissement Québec’s regional offices, the report said. However, those in the same situation who instead made their way to the agency’s main office received funding.

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“The (financial) aid was granted in accordance with the internal management guide, which allows the minister to adjust the conditions for the authorization of loans based on the needs of the file,” wrote Leclerc, adding that “there is a problem of transparency.” With the program.

Speaking to reporters, Leclerc sidestepped the question of whether allowing Fitzgibbon the power to override the program’s criteria constituted good management of public funds. “The important thing is that it is transparent, if that is the case it must be mentioned, it must be made known,” he said, adding that the rules must be clear and equal for everyone.

The eligibility criteria that were made public for the program were not complete or transparent, Leclerc said, noting that some companies may not have bothered to apply for a loan even though they may have been eligible.

Leclerc also found that the application of the PAUPME program varied from one regional municipality to another, and in many cases loans were made without justification. Also in this case, the report found a lack of uniformity in the application of the criteria for establishing eligibility for loans.