ONB reveals millions in loans it'll never see repaid
Opportunities New Brunswick has written off $49M in loans going back more than 30 years
The New Brunswick government's lead job-creation agency has quietly written off tens of millions of dollars in loans to businesses dating back more than three decades.
Opportunities New Brunswick has now officially said goodbye to any hope of recouping the money, some of which dates back to the Frank McKenna era and includes well-known funding fiascoes.
The largest amount is $7.4 million that went to Canzinco Ltd., the then-owner of the Caribou Mine near Bathurst, in 1988-89.
Other high-profile names that appear on the list include Atlantic Yarns Inc., Precision Nuclear, the Royal Oaks Golf and Country Club and Miramichi Lumber Products Inc.
The total amount that the province is wiping from its books is $49 million.
While the losses are not new, People's Alliance Leader Kris Austin said having the amounts compiled in a single document and officially written off underscores the long-standing problem with government subsidies.
"It's not surprising because we know that this has been the pattern … when it comes to how government subsidizes business. It's disheartening but it's not surprising."
Austin said the province would spur more job creation with tax cuts.
"Corporate welfare really doesn't have the effect that we would like it to have."
The writing off of $800,000 to Atlantic Yarns represents just a fraction of the $80 million that Liberal and Progressive Conservative governments poured into the two textile mills in Atholville and Pokemouche in the late 1990s and early aughts.
"We obviously need to stabilize the industry and maintain the jobs, and it is a significant employer in the north of the province," then-Business New Brunswick minister Greg Byrne said in May 2007 when he announced a new $3.4 million loan for the company.
Then-opposition Progressive Conservative MLA Kirk MacDonald supported the move. "From my perspective, I see it as protecting the investment that we've already put in place," he said.
But the operations shut down two years later, throwing 360 people out of work, just one of many examples of failed job-creation loans on the ONB list.
Two loans worth $500,000 to Precision Nuclear are also officially written off.
That company launched in 2006 with the goal of supplying Atomic Energy of Canada Ltd. with components for its refurbishment of the Point Lepreau generating station.
But AECL took the company to court when it didn't have the cash flow to meet its deadlines and ultimately dropped it as a supplier. It shut down in 2009.
55% of old loans deemed uncollectible
Opportunities New Brunswick spokesperson Autumn Lawrence said the Crown corporation opted to formally write off the decades of debts following a recommendation by Auditor-General Kim Adair-MacPherson in 2019.
While the bad loans have been listed in more obscure public documents, the agency posted the list online for the first time this year "as part of a greater commitment to further enhance transparency and accountability to New Brunswickers," Lawrence said in a written statement.
Adair-MacPherson said in her 2019 audit that Opportunities New Brunswick was owed $102 million on old loans and about 55 percent of them were deemed uncollectible.
The write-offs don't affect the province's bottom line because they were accounted for in previous fiscal years, Lawrence said.
Only one of the loans on the list was approved by Opportunities New Brunswick, she said. The others were underwritten by previous government job-creation agencies.
She did not respond to a request for an interview with officials from ONB.
Another write-off on the list is $4.9 million from 2008-09 for the Royal Oaks Golf and Country Club in Moncton.
The money dates back to a loan guarantee originally issued in 1998. It was converted to a loan in 2002 and then to a stake in the company in 2008.
A year later the company's bank called in its loan and a receiver put the financially troubled property up for sale. The bank ranked ahead of the province as a creditor entitled to recoup its money from the sale.
ONB also wrote off $259,000 in loans to Miramichi Lumber Products Inc. a decade ago.
That company became embroiled in several legal battles with the Crown corporation over an $992,000 insurance payout for a 2015 fire at its sawmill.
There's also a write-off of $1.4 million to Air Canada from 1996-97 related to a "customer contact centre." The airline has a call centre in Saint John that has received provincial funding over the years, including $1.5 million in payroll rebates starting in 2018.
Air Canada spokesperson Pascale Déry said any money the airline owed as of April 2003 would have been "compromised and governed" by a court-supervised financial restructuring of the company after it sought bankruptcy protection.
"We have not had this liability in our books for at least 15 years," she said.