A rchive Date
[ 19-11-2002 ]
Category
[ International Relations ]
sub-Categoy
[ Canada ]
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[http://www.canoe.ca/Columnists/weston.html
CIDA money disappear
Not content with just taking our money, the feds now want to risk it on a development bank to provide loans to Canadian companies wanting to flog their wares in the Third World
By GREG WESTON - Sun Media
November 19, 2002
While most Canadian taxpayers are worrying where governments will find the mega money needed for health care, the military, anti-terrorism programs and other essentials, Jean Chretien & Co. are merrily digging another grand Liberal sinkhole for hundreds of millions of dollars in public funds.
The government is expected to announce tomorrow that it is creating a new federal financial institution to provide loans and venture capital to Canadian companies wanting to flog their wares in Africa and elsewhere in the Third World. According to federal planning documents, this latest pot of gold for the corporate welfare crowd will be financed from the public purse with up to $300 million in "seed funding" - government code for a future write-off of mammoth proportions.
The initiative is being announced by Susan Whelan, federal minister responsible for the Canadian International Development Agency (CIDA), the department creating this new lending institution of last resort. The notion of Canada's foreign aid agency being in charge of a bank is a bit like the drunk running the tavern, and virtually guarantees taxpayers will never see their money again.
Even executives at the federal Export Development Corporation apparently think CIDA's scheme could be a fiscal disaster waiting to happen.
The EDC essentially gives taxpayer-guaranteed loans to foreign governments and businesses to buy Canadian exports. The Crown agency recently came under fire for apparently putting Canadian taxpayers at risk to the tune of $10 billion in potentially shaky loans.
But even the high-flying EDC types apparently think the risks they have been taking with taxpayers' money would pale compared to CIDA's proposed banking scheme.
One internal memo from Ian Gillespie, president of the Export Development Corp., warned the "higher risks" of the proposed CIDA scheme would probably exceed even the generous investment-risk guidelines imposed on his agency.
In a presentation to other government officials, EDC executives further warned that CIDA funding to help companies in the early stages of a project "is a very high-risk business with little or no prospect of breaking even.
In another memo, federal auditors noted that CIDA is justifying its proposal in part on the premise that "a number of otherwise promising projects cannot get off the ground because there are no available sources of equity financing.
"The Canadian private sector is reluctant to make such investments on its own due to a lack of familiarity with developing economies and the relatively high level of perceived risk."
Canadian companies, one assumes, would feel much more confident risking other people's money. High-risk projects
Several other federal departments, including finance, also weighed in with concerns about the proposed CIDA bank.
The scheme, for instance, is supposedly to provide financial assistance to small and medium-sized Canadian companies which would otherwise not have the resources to pursue high-risk projects in the developing world. But an internal briefing memo to the minister of finance indicates that two of the three "key Canadian proponents of the initiative" are giant corporations SNC Lavalin and SR Telecom.
Another extensive analysis, apparently from the finance department, is particularly harsh."As indicated by their concept presentation, CIDA exposes a lack of knowledge of the basic financial concepts, terminology and methodologies. "It would not be advisable for CIDA to be involved in any sophisticated financing such as a joint venture through ... loans or guarantees."
Another department warned: "The traditional nature of CIDA's culture is generally not one in which private-sector development initiatives thrive and deliver the best possible results."
Hold on to your wallets, fellow taxpayers - The First Canadian Boondoggle Bank is coming to get our money.
Greg Weston is Sun Media's national political columnist, his columns appear Tuesdays, Thursdays and Sundays. Letters to the editor should be sent to editor@sunpub.com
 World Fact Book (CIA)]
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