A recent report by Canada’s auditor general revealed that the federal government’s pandemic business loans program lacked proper oversight, leading to loans being distributed to ineligible recipients. Export Development Canada (EDC) disbursed $3.5 billion in loans to ineligible businesses as part of the Canada Emergency Business Account (CEBA) program, according to the report released on Dec. 2.
The auditor general, Karen Hogan, highlighted that while EDC acted swiftly to provide $49.1 billion in loans to nearly 900,000 small businesses during the pandemic, the program suffered from mismanagement. Approximately 9 percent of the loans were given to businesses that did not meet the eligibility criteria.
The report criticized EDC for its reliance on sole-source contracts with Accenture, which granted the vendor excessive control over key aspects of the contracts, compromising the program’s value for money. Additionally, EDC failed to implement proper controls in contract management, leading to inefficiencies and potential financial losses.
Accenture’s involvement in selecting a vendor to manage an accounting system for CEBA loans raised concerns of a conflict of interest, which EDC did not adequately address. The report also faulted Finance Canada and Global Affairs for failing to provide sufficient oversight of the program, resulting in delayed and incomplete program elements.
In response to the report, EDC acknowledged the program’s achievements but agreed that improvements could have been made. However, they expressed reluctance to explore options to recoup partial loan forgiveness, citing challenges and potential costs. This response raised concerns from the auditor general about the government’s transparency in recovering funds.
The federal finance department defended the CEBA program as a vital support for small businesses during the pandemic, emphasizing the swift implementation of emergency assistance. The Conservative Party, on the other hand, criticized the program as a costly misstep, pointing to Prime Minister Justin Trudeau’s alleged lack of control over spending.
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