Little-known immigrant fund pulls in $35 million for GNWT
MLAs have been asking many questions, but getting few answers from Finance Minister John Todd about the GNWT’s Aurora immigrant investor fund.
IQALUIT The GNWT’s first Aurora Fund is now worth $35 million, thanks to wealthy immigrants to Canada who have placed or made deposits on investments in the fund over the past year.
Demand from investors remains so high that a second fund, Aurora II, was set up last summer and has already attracted 30 more subscriptions.
Lately, however, it’s attention not money that the little-known Aurora program seems to be attracting.
The fund was set up last year as a way to raise low-cost capital for investment in northern businesses, without using taxpayers’ dollars.
Money is raised by selling unsecured Aurora Fund notes at $250,000 apiece to wealthy people who want to emigrate to Canada.
In return for those contributions, the Canadian government “fast-tracks” their immigration applications.
Little known about fund
The fund is supposed to be used for low-cost loans for eligible businesses operating in the Northwest Territories. But few people know exactly how much has been loaned, or which companies have borrowed the money.
Yellowknife South MLA Jake Ootes, one of several MLAs who have been prodding Finance Minister John Todd for anwers about the Aurora Fund in the legislative assembly recently, believes the Aurora Program should be better publicized.
“I think the visibility of it could be improved,” Ootes said. “There is a lot of money that is available, and it’s supposed to be available for investment in businesses in the Northwest Territories.”
Todd: questions are “ridiculous”
Finance Minister John Todd told MLAs, however, that their questions about the Aurora fund are “ridiculous.”
“This is not a government fund,” said Todd, who as NWT finance minister is also chairman of the Aurora Fund’s board of directors. “I am not asking the board of directors and announcing to this house, who gets money.”
To what degree the fund’s management should submit to public scrutiny has, however, suddenly become a point of debate for MLAs.
GNWT a majority on board
Strictly speaking, the Aurora Fund is operated at arm’s length from the territorial government, but five high-level GNWT officials, including two cabinet ministers, sit on the fund’s board of directors.
That board, a majority of whom are GNWT officials must review all loan applications.
“As a legislator I just said to myself, we just have to find a way and means to publicize this thing. Additionally, is everything running according to the way it should?”
“I wasn’t aware that this is treated like a bank.”
In addition to Todd, the minister of Resources, Wildlife, and Economic Development, the deputy minister of justice and the deputy minister for RWED are all directors, along with three financial advisors from the southern Canada.
Lew Voytilla, comptroller-general for the GNWT, is the Aurora Fund’s president.
Former GNWT mandarin runs fund
As chairman of the Aurora Fund board of directors, the finance minister approved the appointment of the fund’s manager, Roland Bailey, which has raised questions from Iqaluit MLA Ed Picco.
“Does this government have an enforceable set of guidelines that exclude the awarding of its contracts to former senior government officials for a certain time period after they leave public service?” Picco asked Premier Don Morin in the legislative assembly last week.
Bailey was once a deputy minister of economic development, and deputy minister of the executive for the GNWT.
He’s just one of several private contractors hired to administer various aspects of the Aurora Fund, according to Carl Bird, an assistant to Voytilla who works for the Financial Management Board Secretariat.
A company called Cornwallis Financial Corporation, the Pacific and Western Trust Co. and a firm called Arctic Financial Ltd. are also under contract to supply financial services to the Aurora Fund.
A portion of the proceeds from the sale of Aurora Fund promissory notes, plus any earnings, go toward paying sales agents fees, marketing fees, and various operating costs of the fund.
Ootes and other MLAs, especially Kivallivik MLA Kevin O’Brien and Iqaluit MLA Ed Picco, have expressed concern that the process of applying for Aurora Fund business loans is not widely understood.
Why the secrecy?
But there are good reasons the fund’s managers keep a low profile, according to Bird.
“We’re on a very tight budget. The interest rates we’re trying to set on the loans to borrowers are very competitive with the banks, and because of that we have to be very careful about watching how much money we spend,” said Bird. “That’s why there hasn’t been a huge marketing blitz to get out and inform people.
“The other reason for not having a huge marketing blitz is simply to avoid every Tom, Dick and Harry from putting in an application who on the surface obviously doesn’t qualify.”
Besides, most potential borrowers learn about the Aurora Fund as soon as they approach economic development officials, Bird said.
“RWED regional superintendents have been briefed about the Aurora Fund and are informing NWT businesses of that option for financing.”
Applicants must meet a number of basic lending requirements, too.
Loans start at $750,000
For starters, only applications for loans of $750,000 or more are even considered.
Aurora funds can’t be used for refinancing, either. Nor are they supposed to be used as a line of credit.
Businesses that qualify for Aurora Fund loans must operate in the Northwest Territories and the owners of such busineses must live in Canada.
Finally, in order to qualify for a loan through the Aurora Fund, applicants must intend to use the money either to start up a new business or to expand an existing one, and be able to demonstrate that the business will create or maintain jobs in the North.
Investor interest in the Aurora Fund surpassed expectations over the last 12 months, Bird said.
A total of 139 immigrant investors the limit set on Aurora Fund ’96 had signed subscription agreements by mid-June of this year.
Of those, 52 have transferred the full $250,000, while others who signed up for the fund have made deposits of between $10,000 and $100,000 each.
“Certainly the demand for Aurora Fund notes was there and there were still more immigrants who wanted to buy notes, so we started a second fund,” Bird said, adding that unnamed borrowers also continue to show interest in the money.
“I don’t know how many applications have come forward and how many have been approved by the board, but the demand has been steady,” he said.