Canadian province's tribal loan nightmare refuses to go away

A 2012 bid by the Port Edward Island province of Canada to set up an online gambling licensing jurisdiction with the aid of the local Mi’kmaq Confederacy tribal authority keeps coming back to haunt the government, and raised its head again this week.

The venture involved a now disputed contractual arrangement with Capital Markets Technologies, and a conditional loan of Cdn$950 000 to the tribal authority, which was to be repaid from ensuing e-gaming revenues (see previous reports).

In the debacle which followed, the project failed, Capital Markets launched litigation against the state for $25 million, and the tribal authorities argued that the money could not be repaid because the projected e-gaming venture has not materialised and therefore cannot provide the funds.

PEI politicians have been arguing the pros and cons – and who was to blame for the loss of taxpayers’ money – ever since…and legal costs have mounted.

Late last year Finance Minister Allen Roach told the P.E.I. Legislature that legal costs have reached Cdn$118,000 and counting, and when the case was in the PEI Supreme Court, lawyers for the government estimated the total legal cost will approach Cdn$1.2 million by the time it’s over… more than the original loan to the Mi’kmaq.

On Friday the Opposition hammered away at the issue in the final question time of the Legislature’s spring sitting, asking provincial Premier Wade MacLauchlan if he would publicly release an audit report commissioned by government on the debacle.

Opposition Leader Jamie Fox said:

“This is an issue that the premier directed the auditor general to bring in a special audit of this file … Will you publicly commit today, Mr. Premier, to release the special audit report on e-gaming when you receive it from the auditor general?”

MacLauchlan appeared to fudge a little around the possibility, suggesting that the report would probably go to the Speaker, but that if it was up to him he would release it.

But, as observers were quick to point out, the auditor general is required by legislation to submit her annual report to the Speaker of the legislative assembly, thus making it a public document, but the same rule doesn’t apply to special audits like the e-gaming report.

Auditor General Jane MacAdam later confirmed to CBC News that she will deliver her e-gaming report not to the legislative assembly but to the provincial cabinet and to the Standing Committee on Public Accounts, those being the two government bodies that asked her to investigate.

So Premier MacLauchan is on the spot after all as the man to deliver what is likely to be a controversial document.