P.E.I. Opposition hammers government over lending practices

The Opposition seized the opportunity to criticize the government's lending practices during the first question period of the new legislative session Wednesday.

Concerns over those lending practices and government's growing loan portfolio, now worth $370 million were highlighted in the last two annual reports from P.EI.'s Auditor General Jane MacAdam.

• P.E.I. auditor general says provincial loan agencies need better monitoring

• Homburg International financing expands to $38.6M

Among the concerns raised by the auditor general:

• Government has no program to measure the economic benefits that come from its loans.
• Policies on risk assessment of loans lack "detailed guidance."
• The policy dealing with security requirements is vague and "does not provide clear direction for staff."
• There's no policy detailing how to deal with problem accounts.

"The government policy on problem loans is silent," said PC MLA Colin LaVie during question period Wednesday. "No definition, no steps to communicate with the loan holder, and no steps to fix the problem."

Opposition economic development critic Matthew MacKay went after Economic Development Minister Heath MacDonald over government's failure to monitor the economic benefits of its loan programs.

"Simply put, the minister has no clue if public money loaned out was put to good use," MacKay said. "He doesn't even measure it."

MacDonald indicated government is in the process of implementing most of the auditor general's recommendations. And he said a further review of loans could be in order.

"We're looking at all aspects of our lending portfolio," MacDonald said. "There may be even be a time coming pretty soon this government as a new government will be doing a review of our lending portfolio."

Bevan-Baker questions $30 million to Dyne Holdings

Green Party Leader Peter Bevan-Baker also took government to task over its lending policies during question period, honing in on a single loan that the auditor general raised concerns about in her 2016 report.

In 2008 the provincial cabinet approved a loan request for $30 million to Dyne Holdings, which was purchased in 2013 by Homburg International. Proceeds from the loan were used to build the Holman Grand Hotel, among other projects.

According to the auditor general, cabinet approved the loan despite "several significant issues" that were raised by Crown lending agency Island Investment Development Inc.

"Nothing indicates that IIDI supported that loan request, and the loan applications was not presented to the IIDI board of directors for prior approval to executive council's approval," Bevan-Baker said. "The auditor general also pointed out that no proper security and no proper guarantees were sought."

Premier Wade MacLauchlan told the House the loan is in good standing. However, in 2012 government wrote down the value of the loan on its books by $10 million, indicating it does not expect to recoup the full value of the loan.

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