Hundreds of millions of dollars have been invested in P.E.I. companies through an immigrant investor program, raising questions of who is responsible for oversight of the money.

'Canada Immigration is alarmed by that because of the failure rate of startup companies.'— Rob McEachern

More than 2,000 potential immigrants to P.E.I. put down $200,000 each between April 1 and Sept. 2 this year. The resulting $400 million was distributed as equity investments in Island companies in private transactions arranged by local brokers, according to documents obtained by CBC News.

Local businessman Rob McEachern applied for some of that money last summer, but his application was late and therefore rejected.

"I applied because I thought the thing was a farce," he said. "Anyhow, it was just too good to be true."

After being rejected, he started his own investigation into the program. Earlier this month a package was dropped into his mailbox. It contained high-level correspondence between PEI Business Development, an agency of the provincial government, and Citizenship and Immigration Canada.

Island businessman Rob McEachern believes liability over investments could lie with the provincial government. (CBC)

The documents raise several issues, the first being about where the money is going.

"That money is retained by the provincial government until [the immigrants] get approval," said McEachern.

'It could be seven to 10 years, according to Canada Immigration."

Citizenship and Immigration expressed concerns that immigrants had to put their money up front, not when they actually received a visa, and that the money was going to new companies.

"Canada Immigration is alarmed by that because of the failure rate of startup companies," said McEachern.

"Canada Immigration wonders where the liability is when these companies fail during the five years and they're unable to refund the money to the investor."

A private transaction

McEachern believes liability could lie with the province, a serious issue given the amount of money concerned; $400 million is equal to about a third of the province's annual revenue.

Innovation Minister Richard Richard Brown refutes that interpretation.

"This is still an investment," Brown told CBC News Friday.

"This is an investment by a person, in a foreign country at that time, in a local company."

While the province has a say in identifying potential immigrants, he said, the actual deal is worked out through a private broker.

Potential immigrants had to clear a number of hurdles before being eligible for the program, which ended in September, but health and security checks remain. Applicants rejected are supposed to receive their money back after five years. Brown suggested if the investment went bad, it was a private matter between the company and the investor.

Investments from the program were broken down into units of $50,000 each, with no company allowed more than four units, but McEachern has heard some people received much more than that.

"I understand one Charlottetown businessman received 35 units himself, which is $1.7 million," he said.

Brown was unable to refute the allegation, saying he didn't have a list, and noting that the limit on units was per company, and not per individual.