P.E.I. wants to recoup crab loans
The P.E.I. government will try to recover the $17.1 million given out in loans to eight Island crab fishermen in 2005 and 2006.
The loans are now classed as non-performing, and the fishermen in default.
Innovation Minister Allan Campbell said Monday he'll work with fishermen to recover the full amount of the loans.
"It's no different than any other loan," Campbell said. "We'll continue to work with the fishermen and try to realize on the loans, and we'll do just that."
The snow crab loans to eight fishermen were highlighted last week in Auditor General Colin Younker's report.
The loans were provided to allow some fishermen to purchase crab licences from the mainland as part of an initiative to grow the fishery. The loans were worth $13.3 million in total and have not been repaid. With interest and late payment penalties, those fishermen now owe the government $17 million.
In 2009, the Liberal government asked Younker to review the loans and whether they were based on viable, prudent business plans.
The auditor said the previous Conservative government was making a strategic investment to increase snow crab processing. However, he said many of those loans had initially been denied by the PEI Lending Agency as high risk because of the volatility of price and quota in the snow crab fishery.
Mike Currie, the former Conservative industry minister, said Monday that the loans were supposed to be a strategic investment in the crab industry.
"We made this initiative to shore up our processing plants, which were down in production because of the cod closure and all of that stuff, and we want to see if our fishers could benefit from this resource that was right on our doorstep," he said.
The auditor, however, found no strategic economic plan had been developed for that processing.
Crab prices peaked in 2004-05, and the fishermen ended up paying top dollar for the licences.
In the end, the auditor general found the loans were not property monitored.
"There were some issues around unreasonable expectations and unreasonable levels of risk," Campbell said. "I guess you could make the argument that, sure, it was strategic investment, but I don't think there was due diligence done on the file."
Currie said there's a history of high-risk government loans on the Island to help develop industries.
"Other initiatives were also placed in the same position, whether it was the mussel industry, the blueberry industry, cranberry industry or even the oyster industry. They're all new initiatives taken on by a government to better your province and allow it to grow and prosper, and the crab industry is no different," he said.