Quebec Auditor General Says Companies Received Pandemic Funding Despite Ineligibility

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The Auditor General of Quebec says the Legault government has provided emergency financial assistance under its two main COVID-19 support programs to several companies that did not strictly pass the test to receive aid, some of which were already in financial difficulty before the health crisis.

Of the 22 loan transactions his team examined, 10 loans worth a total of $ 68 million were made to borrowers who did not meet the publicly available criteria of the government’s main pandemic support program, Auditor General Guylaine Leclerc said in her annual report released Wednesday. They include two companies that have never been profitable, six others in financial difficulty long before the start of the pandemic and one that has received support to fuel its expansion plans and not survive the pandemic.

The Minister of the Economy of Quebec, Pierre Fitzgibbon, acting on the analysis and recommendations of the staff of the ministry, authorized aid to several companies on the grounds that they were considered “strategic for the economy of Quebec”, according to the conclusions of the Auditor General. None of the companies are named in the report.

“To judge whether it was a ‘strategic’ company, I would have liked to see the criteria for it,” Ms. Leclerc told reporters at a press conference in Quebec. “Without any criteria, it becomes difficult to judge whether this is the case or not. “

The audit findings reveal some of the shortcomings in the way Prime Minister François Legault’s government handled business support during the pandemic, an issue many other governments have grappled with over the past two years. But they also once again raise questions about the extent to which government financial decision-making is discretionary without full transparency.

“This opens the door” to favoring certain businesses, declared the opposition member of the Parti Québécois Méganne Perry Mélançon. “And that is why we have to shed light on all the loans that have been given.”

Mr Fitzgibbon defended his government’s actions, telling reporters he personally intervened in around 25 pandemic aid business cases and that the 10 loans withheld by the Auditor General had been recommended for approval by the Investissement Québec staff. He said that it is impossible to completely standardize the lending process for all borrowers.

“A government has to be flexible,” Fitzgibbon said, adding that businesses can always contact the government if they think they need help.

Quebec provided financial support to approximately 10,000 businesses affected by the fallout from COVID-19 through two main business assistance programs, known as PACTE and PAUPME, which had an envelope of $ 3 billion funding in March. Among the companies that received support, less than 0.5% declared bankruptcy, showing that the government’s goal of helping companies weather the crisis has worked, according to the official response from the Ministry of the Economy. to the report of the Auditor General.

Among the companies publicly identified as benefiting from emergency support from Quebec, we find the hoteliers Groupe Germain and Groupe Tidan, as well as the distributor of automotive products Uni-Select. Telecon, a telecommunications network infrastructure planner, based in Anjou, Quebec, was the main recipient of aid in November 2020, according to a list published by the newspaper La Presse.

Quebec was able to grant the 10 loans identified by the Auditor General under a clause in the internal management guide of the PACTE program which allows the Quebec Minister of the Economy to exercise discretion on a case-by-case basis and authorize financial assistance even when the criteria are not met, said Ms. Leclerc.

Because the existence of this special clause was not publicly communicated, some companies may not have been aware that they could benefit from assistance, she said. She said this lack of transparency means the government has failed to provide a level playing field for all businesses wondering whether to seek help.

The Auditor General said there were other problems with the way the government handled taxpayer funds during the crisis. Regarding the PAUPME program, which is an emergency assistance program for small and medium-sized businesses managed at the regional county municipality level, Ms. Leclerc’s team found no explanation for the amounts. and specific terms of loans granted on several files.

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