PE: Businesses miss deadline to report PNP spending

[CHARLOTTETOWN, PE] — Businesses that received money through the Provincial Nominee Program have not yet accounted for how the money was spent, despite a two-year reporting deadline that, for many, has already passed.

The Provincial Nominee Program (PNP) offered expedited Canadian visas to immigrants who invested $200,000 on P.E.I., some of which went into an Island company. It was established to encourage immigration to the province.

Businesses that participated in the PNP were required to submit a business plan with a detailed explanation of how they would spend the PNP investments they received.

Prior to 2007, there was nothing to ensure companies were keeping to their businesses plans and spending their PNP units appropriately. So in October 2007, the province implemented the Use of Proceeds Agreement. This agreement states all proceeds from PNP units must be used for either expansion of the operation and/or the purchase of necessary capital assets, excluding motor vehicles. It also required all businesses to file a report detailing how they spent their PNP money and submit it to Island Investment Development Inc. (IIDI) within two years.

If this report is not received within the two-year window or if the money was not used as specified in the business plan, companies could be charged a penalty of $55,000 per investment unit received.

Auditor General Colin Younker noted during his investigation into the PNP last year there were no follow-up procedures in place to ensure these reports would be filed. In his 2009 report, he recommended IIDI develop a strategy to follow up on businesses that received PNP units and to include the results in its annual report. He also pointed out that the initial files subject to the Use of Proceeds Agreement would be due in the fall of 2009.

IIDI sent out its first follow-up letters to PNP companies in late 2009, reminding them to file their reports. But these friendly reminders have mainly gone unanswered.

“Most companies will wait until their year-end financial statements are complete before responding,” a communications director for the province wrote in a recent email to The Guardian. “As such, very few responses have been received.”

Since the province processed 750 immigrant nominations in 2007, that means at least that many have violated the two-year reporting deadline.

Younker told the provincial public accounts committee recently that during his investigation into the PNP last year, his office sought a legal opinion on the Use of Proceeds Agreement. This legal opinion determined it is legally binding, and that IIDI can pursue companies that do not comply with the agreement with heavy fines.

The Guardian attempted to arrange an interview with someone in government or at IIDI to discuss the Use of Proceeds Agreement.

The director of communications for the Department of Innovation advised that she forwarded this request to the minister. No further response was received.