GN prepares to merge lending agency with Nunavut Development Corp.
GN backtracks, moves ailing NBCC to Iqaluit
After five months of foot-dragging, the Government of Nunavut has begun to move the Nunavut Business Credit Corp. to Iqaluit, after it finally acknowledged last week that Cape Dorset is a poor place for the territory's lender of last resort to be based.
Patterk Netser, Nunavut's minister of economic development, anounced the climb-down on March 14, when he tabled a report that says the NBCC will move to Iqaluit by April.
"It's already happening," Netser said later.
Since November, government officials have maintained they would not move the NBCC, fearing it would erode Nunavut's policy of decentralizing jobs to smaller communities.
But decentralization is not dead, Netser said.
To compensate for the five NBCC jobs that Cape Dorset will lose, the community will receive three workers from the Department of Community and Government Services, and one correctional officer with the Department of Justice.
Widespread mismanagement within the NBCC became the biggest political embarrassment in Nunavut's history after Canada's auditor general, Sheila Fraser, pried into the organization's operations last autumn and discovered that basically nothing worked as it should.
Businesses were not being properly assessed to see if they were viable before they received loans. Loan payments were not being tracked. Records were in shambles. In some cases, client files were simply missing.
Several million dollars in loans are believed to be uncollectible. The RCMP is now investigating the NBCC to see if any fraud took place.
The government has high hopes the move will offer the type of "hands on" support the NBCC needs.
Its new office is located adjacent to the offices of the Department of Economic Development. Experienced financial workers in government, and a private accounting firm, are all nearby.
And in Iqaluit there's a bank, and someone to fix computers. Cape Dorset had neither.
The government hopes the move will make it easier to recruit and retain staff – an ongoing struggle for the chronically under-staffed agency.
Qualified applicants for the position of CEO have turned down the job, citing its location as a big reason for their decision.
One former CEO had also complained that it took seven days of travel to conduct one day of business in Cambridge Bay.
The NBCC's implosion toppled one cabinet minister, David Simailak, who was caught, as the minister who oversaw the NBCC, in a perceived conflict of interest, as the partial owner of two companies that each received $1 million loans from the agency. He resigned in December.
To add to the embarrassment, the interim CEO of the NBCC, Allan McDowell, was suspended from his job in December after it was revealed he faced theft and fraud charges. McDowell quit in February after he was convicted of two counts of fraud, for cashing cheques belonging to his old employer, Eskimo Point Lumber of Arviat.
A report on the future of the NBCC, tabled by Netser, reveals that the lending agency's move to Iqaluit is just the first step in a bigger plan to reform the NBCC and its sister organization, the Nunavut Development Corp., which owns a stable of businesses that are propped up with government money.
A report, prepared by an interdepartmental working group in February, recommends the two organizations eventually be merged, to create a new body, tentatively called the Nunavut Business Development and Investment Corp.
The new organization would be based in Rankin Inlet, with a branch office located in Iqaluit, the report states. It recommends using a similar merger that took place in the Northwest Territories as a model for Nunavut to follow.
But whether this plan is ever executed will depend on the new government that emerges after the Oct. 27 territorial election.
Expect to hear more talk about this merger when the Nunavut Economic Forum meets in several months. The report suggests now is a good time to begin talking about what the new agency should look like.