A P.E.I. company over-billed and misled the Canadian government while working on a multi-million dollar contract overseas to provide aid to Sri Lanka after the 2004 tsunami, the P.E.I. Supreme Court has ruled.

'Its representations were purposefully misleading' - Justice Gordon Campbell

The Canadian Agro Sustainability Partnership won a contract from the Canadian International Development Agency to provide aid to Sri Lanka after the tsunami.

CASP is an umbrella group representing about 50 Island firms and organizations on a not-for-profit basis, headed up by Doug MacArthur. In 2006 MacArthur told CBC News that rebuilding efforts in Sri Lanka offered great opportunities for P.E.I. companies.

CASP's contract with CIDA, was worth $3 million. But a 2007 audit found CASP was marking up salaries of its field staff by multiples of up to 10, and charging those amounts to CIDA.

The audit disallowed $1.4 million in CASP billings and that figure was later revised down to $750,000. After CIDA suspended payments in January 2008, CASP filed a lawsuit for lost revenue for the Sri Lanka work and for other CIDA contracts in China and Ukraine from which CASP claimed it was shut out.

MacArthur told the court that payroll mark-ups are standard business practice.

In his 115-page written decision Justice Gordon Campbell wrote, "CASP was not only less than forthcoming [to CIDA] … its representations were purposefully misleading … and failed to give full, frank and honest disclosure."

He ordered CASP to pay back $245,526.41, plus interest and court costs.

Campbell noted that CASP did good humanitarian work in Sri Lanka.  According to the company's website, CASP has recently completed work in Russia and has current projects in Eastern Europe.

MacArthur declined the opportunity to make a comment to CBC News, but said CASP will have a statement to make in the future.