Investments broke YTG’s regulations
Premier Dennis Fentie's Department of Finance broke the law with its failed $36.5-million investment into asset-backed commercial paper, the Auditor-General of Canada has found.
Photo by Vince Fedoroff
Auditor-General Sheila Fraser discusses the Yukon government's ill-fated investment decision at a news briefing at lunch time today in Whitehorse.
Premier Dennis Fentie’s Department of Finance broke the law with its failed $36.5-million investment into asset-backed commercial paper, the Auditor-General of Canada has found.
“Yukon’s Financial Administration Act prescribes the investments that the Government of Yukon can make,” reads a seven-page audit of the department’s investment released today.
“We found that the government’s investment in summer 2007 in two asset-backed commercial paper trusts that were set up by non-banks (total value: $36.5 million) did not meet the requirements of the act.
“When this report was written, the government had not yet received any payment of principal and interest from these two trusts, and it has not determined the financial impact this may have.”
The office of the Auditor-General of Canada held a briefing late this morning to discuss the report while Auditor-General Sheila Fraser was meeting with the territory’s elected officials to share the findings of her office. Fraser hosted a media briefing that began at noon today.
The report on the investment goes on to say: “We also found that the government has made prior investments in asset-backed commercial paper by trusts set up by both banks and non-banks.
“These investments also did not meet the conditions set out in the act. It is important that the Department of Finance manage the investment of public money prudently and in accordance with legislation.”
Fentie, as Finance minister, and his cabinet colleagues, defended the investments as routine, everyday business with their belief the investments were guaranteed, while the auditor-general found no evidence of any guarantee.
In fact, the report cites a paragraph which specifically states there is no guarantee.
Opposition leaders spent the fall session of the legislature calling for the Finance minister’s resignation.
Fentie, and Deputy Premier Elaine Taylor in his absence, said the investments were so routine, their approval didn’t even reach the cabinet office.
The crash in the asset-back commercial paper market is still plaguing Canadian investors to the tune of $33 billion. There has been no word on how much of the $36.5 million Yukoners can expect to recover.
Financial institutions are restructuring the debts. The restructuring proposal was initially scheduled for mid-Decemeber, and was then postponed to January, and subsequently to March.
Fraser concluded her investigation into the investments on Jan. 4.
Fentie announced Jan. 28 that his Finance department will no longer make any similar investments.
Fraser also delivered her findings of the audit of the government’s management of the 2007 Canada Winter Games.
The report identifies some concerns but largely says the government did a good job managing the event.
John
Feb 7, 2008 at 3:48 pm
Big surprise. Fentie broke the law and lied about it. He assured Yukoners we had nothing to worry about. That was a lie. Now he’s saying that he had nothing to do with the decision. That seems to be either a lie or an admission that he wasn’t doing his job.
Time to fall on your sword, Dennis. Yukoners deserve better leadership than what you’re providing.