Simailak says Fraser advice threatens decentralization

David Simailak, the minister of economic development, told MLAs last week that the Government of Nunavut will not move the Nunavut Business Credit Corp. from Cape Dorset, despite devastating observations made by Sheila Fraser, the Auditor General of Canada.

"Once we start re-centralizing positions because we've encountered problems recruiting staff into communities, we risk drifting into a situation where the communities see more and more jobs going to the capital," Simailak said Nov. 29, at an appearance before the legislative assembly's operations committee.

This policy flies in the face of advice the auditor general gave Nunavut in her 2005 report on the GN's operations, which found the GN is at grave risk of fraud and financial mismanagement.

She said that's because the GN's financial workers are spread too thin, jeopardizing the recruitment of qualified staff and the training of beneficiaries.

"At present your government does not have enough professional accountants for such a decentralized environment…" Fraser said in her 2005 report, which urged the GN to "recentralize" at least some financial jobs.

Simailak, however, said this could lead to "a slippery slope," in which smaller communities would gradually lose jobs.

Fraser found that the NBCC lending agency suffered from its location in Cape Dorset, which doesn't have a bank and where its tiny, five-person staff was often plagued by staff shortages.

"If you put these corporations out into communities, will that community be able to support the corporation?" Fraser said.

And Fraser urged MLAs to look closely at the underlying reasons for the NBCC's administrative collapse.

"In many ways it comes down to capacity and competence," Fraser said, suggesting that MLAs try to figure out why that capacity and competence was missing from the NBCC's operations.

Alan McDowell, the NBCC's acting boss, told MLAs that only one beneficiary now works at the corporation's office in Cape Dorset.

That information prompted a scathing reaction from MLAs.

Keith Peterson, the MLA for Cambridge Bay, accused Simailak of endangering an agency that's supposed to serve 31,000 people in 25 Nunavut communities.

"Is it a greater priority to keep the NBCC in Cape Dorset where one person will be employed… or try to fix it so 31,000 people can be potentially helped?" Peterson said.

Hunter Tootoo, MLA for Iqaluit Centre, accused the government of evading reality.

"It's telling people what they want to hear," Tootoo said.

Alex Campbell, a veteran administrator who served as deputy minister of economic development for about six years, told MLAs that the NBCC's location in Cape Dorset did make it difficult to attract the best staff.

He said that in the last job competition for a chief executive officer, the GN's leading candidate for the job turned it down because of "salary and location."

After that, the GN moved down the list, picking Mel Orecklin, the CEO who ended up presiding over the NBCC's worst years. Campbell said Orecklin resigned in December of 2006, after receiving several written warnings.

During Orecklin's tenure between 2004 and 2006, the NBCC went 14 months without a key financial position being filled – the comptroller's job.

Simailaks' proposed scheme for fixing the NBCC is to merge it with the Nunavut Development Corp., following the example of the Northwest Territories, which put its credit corporation and development corporation under one roof after division of the territories.

The NDC owns a family of money-losing businesses in Nunavut that it operates with community partners.

Most of those businesses are kept afloat with the help of $3 million in GN subsidies. Those subsidies produce about 140 jobs, nearly half of which are located in one community: Pangnirtung.

Simailak said the GN hired a consultant to study the merger scheme earlier this year. He said the GN is now studying that consultant's report.

In her latest audit on the NBCC, tabled Nov. 5, Fraser issued a "denial of opinion" for the corporation's 2005-06 financial statements, a judgment reserved only for the worst of the worst.

Next year, the NBCC will make the history books. For its 2006-07 financial statements, Fraser expects to issue a second denial of opinion, the first time in Canada that a federal auditor general has ever issued such a judgment two years in a row.