Government staff, not cabinet, decided to hand an untendered contract to the company that ran a controversial immigration program and is now suing the province, a senior bureaucrat says.

Rosalind Penfound, deputy minister of immigration, appeared before the public accounts committee of the Nova Scotia legislature Wednesday to answer questions about the economic nominee program.

'I was not aware there was a directive to tender that contract.'—Cecil Clarke, former economic development minister

She said cabinet ordered the contract to be tendered, but economic development staff did the opposite based on a "decade's worth of experience" after looking at the unsolicited proposals.

"Staff at the department honestly believed that they were making the best recommendation given the selection criteria and the urgency to begin a program. Regardless, while unintentional, not following a directive of executive council was inappropriate," Penfound said.

Cornwallis Financial Corp. was hired in 2002 to run the business mentorship program, now being phased out amid concerns that participants who paid $130,000 never got their money's worth.

The contract with Cornwallis was pulled last year and the province took it over, prompting the company to sue. The province is also offering $100,000 in refunds to hundreds of applicants who were accepted but not matched with a business.

The provincial auditor general is investigating the program.

Cecil Clarke, the minister who authorized the decision to bypass the tender process, said he only recently learned about the original cabinet order.

"In fact it has just come to my attention just in the last day or two. I was not aware that there was a directive to tender that contract," said Clarke, who was minister of economic development at the time.

Opposition skeptical

That explanation didn't make sense to Liberal Leader Stephen McNeil.

"How could you not know that? How could you not sit in cabinet meetings and then all of a sudden realize that the department that you're the minister of went against a recommendation made by the cabinet that you sat around?" McNeil said.

NDP Leader Darrell Dexter was also skeptical.

"It strains credibility to think that, after all this time, this would come out now," said Dexter.

A government spokesman said the three people who were involved in the decision to hand over the contract to Cornwallis were disciplined, but no one will identify the bureaucrats or say what sanctions they faced.

Cornwallis is suing the province over $1.4 million in interest that had accumulated in the program's bank account by the summer of 2006.