'Lack of due regard for transparency' in e-gaming file says P.E.I. auditor general

The P.E.I. government's failed initiative to regulate e-gaming from 2009-2012 included actions that demonstrated a lack of "regard for transparency and accountability,' says the province's auditor general.

'Numerous examples of non-compliance with legislation, policies and controls'

The P.E.I. government provided a loan in 2011 worth $950,000 to the Mi'kmaq Confederacy of PEI to finance what ultimately became a failed bid by the province to become a regulator of online gambling. (Eugenio Marongiu/Shutterstock)

The P.E.I. government's failed initiative to regulate e-gaming from 2009-2012 included actions that demonstrated a lack of "regard for transparency and accountability," says the province's auditor general.

P.E.I. Auditor General Jane MacAdam released her final report on the province's e-gaming initiative Wednesday,

"Throughout this report there are numerous examples of non-compliance with legislation, policies and controls," reads the report.

P.E.I. auditor general Jane MacAdam makes 15 recommendations in her report into the province's e-gaming initiative. (Kerry Campbell/CBC)

"Although the dollars involved were not always significant, these legislative and policy requirements are designed to minimize risks to government and protect the interests of taxpayers. A number of decision and actions demonstrated a lack of due regard for transparency and accountability."

MacAdam pins the government's losses at a minimum of $1.5 million.

Loan never repaid

At the centre of the controversy was a $950,000 loan provided to the Mi'kmaq Confederacy of P.E.I. in December 2011 for it to explore a partnership with the government to regulate e-gaming. That loan was never repaid, and MacAdam recommends it be written off.

MacAdam noted that while the government was the main player in the e-gaming initiative, it operated outside of government's regular controls. The report includes a number of recommendations that simply state government should follow its own rules and perform due diligence.

She also noted the loan was approved after $750,000 in costs were already approved, and that approval came from the finance minister without cabinet approval.

According to the auditor general, government also provided three grants totaling $432,000 to the Confederacy for the project. The third grant of $100,000 was provided by Innovation PEI in January 2013, almost a year after the auditor general says government decided to stop working on the e-gaming initiative.

According to MacAdam, the Mi'kmaq Confederacy continued to work on the file with a local law firm after government had already decided to pull the plug on the project. Invoices for some of that work were paid through the third grant from Innovation PEI.

The auditor general told reporters costs for the e-gaming initiative "could easily" have surpassed the $1.5 million she was able to ascertain, but there was no central tracking of the costs involved.

Robert Ghiz, who was premier at the time, has told CBC News he will not make a comment on the report at this time.

Report recommendations

The report included 15 recommendations.

  • When engaging in joint initiatives with external parties, government should ensure taxpayers' interests are protected through written agreements. These agreements should address, at a minimum, roles and responsibilities, conflict of interest, confidentiality, and government access to files and information.
  • Innovation PEI should ensure grant approval documents and agreements accurately reflect the project being funded.
  • Innovation PEI should monitor grant funding in accordance with the terms and conditions in the letter of offer.
  • Island Investment Development Inc. (IIDI) should not disburse loan proceeds prior to signing loan agreements and obtaining security.
  • In accordance with the Financial Administration Act and Treasury Board policy, government loan guarantees should be authorized by the Lieutenant Governor in Council.
  • The Department of Finance should strengthen its financial reporting practices to ensure all loss provisions are reflected in the consolidated financial statement of the province.
  • IIDI should strengthen its financial reporting practices and ensure all significant information is disclosed.
  • In accordance with the Financial Administration Act, IIDI should recommend to Executive Council the write off of the loan to the Mi'kmaq Confederacy of P.E.I.
  • IIDI should provide the required information on its loan portfolio in its quarterly reporting to Treasury Board.
  • Innovation PEI should perform adequate due diligence prior to entering into commitments or agreements with external parties.
  • Treasury Board policy on contracting should be expanded to address conflict of interest situations with contracts.
  • The Public Archives and Records Office, in cooperation with public bodies, should monitor compliance with records management policies and procedures and submit compliance reports to the minister of education.
  • The minister of education, as the minister responsible for the Archives and Records Act, should take necessary action to enforce compliance with the act.
  • Treasury Board should take action to enforce compliance with its policies on contracting.
  • Government should consider adopting whistleblower legislation.

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With files from Kerry Campbell


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