Angry in the Great White North

From CP:

The federal government is overhauling a controversial business investment program to try to improve the program's image and expand its reach.

Industry Minister David Emerson says Technology Partnerships Canada, which has faced numerous audits and questions during its nine-year history, is being phased out.

It will be replaced by a new program aimed at more small and mid-sized firms.

Emerson says the new Transformative Technologies Program will also face much tighter scrutiny.

That includes plans to make more information public about Ottawa's investments in companies through the new program.

What sort of scrutiny? Why does the size of the firm matter? Was the tightness of the scrutiny the problem, or the scrutinizers themselves?

What was Technology Partnerships Canada?

Great ideas are the currency for success. Technology Partnerships Canada (TPC) is a special operating agency of Industry Canada with a mandate to provide funding support for strategic research and development (R&D), and demonstration projects that will produce economic, social and environmental benefits to Canadians.

TPC's main R&D program is geared to pre-competitive projects across a wide spectrum of technological development. The program focuses on key technology areas such as Environmental Technologies, Aerospace and Defence Technologies and Enabling Technologies, which includes biotechnology and health related applications, as well as manufacturing and communications technologies.

This from the website which is still up.

From their annual report for last year:

As recommended in the audit and evaluation process, TPC has begun to implement a new system to help track and report the economic, social and environmental benefits that its investments deliver. The development of this system will allow TPC to more effectively demonstrate the important benefits that Canadians can anticipate from the program's investments.

Using this new model, benefits to the company, industry and Canadians in general will be used to demonstrate the value of investing in projects. Work is now under way to develop these important measurement criteria. This new reporting and evaluation system is expected to be developed in 2004-2005.

TPC is also developing new procedures and administrative improvements to address a number of recommendations that flow from the audit and evaluation. These commitments to improvement will be reassessed on an ongoing basis to ensure TPC's ability to keep up with the changing business realities our industry faces.

Now that refering to a government-run audit that was performed in 2003:

The audit found that, in general, controls related to the selection, approval, payment and review of TPC projects and operations are in place and operating effectively. Effective management practices noted included: the existence of an established approval process; a formal claims process; and the outsourcing of the repayment administration function. However, opportunities exist to strengthen aspects of the control framework in such areas as: strengthened project file documentation, the analysis of actual versus forecasted repayments; the classification of amendments and the prioritization of investment outlines in the Enabling and Environmental sectors. For IRAP-TPC, in general, controls related to the selection, approval, payment and review of projects and operations are also in place and operating effectively. Effective management practices noted included: the existence of an established approval process and the effective utilization of the repayment administration function. However, opportunities exist to strengthen project file documentation and ensure that technical advisors have the business backgrounds and/or business related experience needed to minimize the risk that items, of a critical financial nature, are not appropriately considered in the due diligence and monitoring processes. The audit did not find any instances of impropriety with the transactions tested.

No impropriety? Yet another audit was performed, this time by an outside company, Raymond Chabot Grant Thornton:

Industry Canada has ordered a massive audit into $490 million in handouts to dozens of technology firms to determine whether any tax dollars were misused.

The investigation into the 58 projects got under way last August, just before the Gomery commission began public hearings — but unlike Gomery, the audit remains shrouded in secrecy.

The department has already uncovered four cases where a lobbyist received a total of more than $2-million in forbidden commissions. Three of the offending firms were publicly traded British Columbia companies that were required by securities regulators to disclose the problems; the fourth is an as-yet unidentified privately owned company.

That audit, which is finding all sorts of interesting things, is still ongoing:

The TPC now also finds itself in the midst of a growing controversy over improper payments made to middlemen by companies looking for TPC support. An audit is being conducted by Raymond Chabot Grant Thornton Consulting Inc., which follows on a separate audit last year that discovered $3.7-million in improper payments had been made to middlemen. [September 16]

Secrecy has been a big issue:

While a re-make of the TPC is in the works, public interest researcher Ken Rubin says he will believe it when he sees it. Mr. Rubin filed a complaint last year with the Information Commissioner, John Reid, after having a difficult time obtaining information about TPC's internal decision-making process involving grants.

"The program has gone on since 1996 with enough bumps that should have put a halt to the money going out," he said. "Some call it a huge slush fund and not really an innovation fund. We're coming around to a decade and this agency is still unaccountable and still secretive, and it hasn't got a clear mandate."

Mr. Rubin said he spends a lot of time monitoring different federal agencies but the TPC is particularly challenging. "You don't know who's getting these grants, what jobs are being created, where the royalties are, what's going on with these companies."

So a more transparent program is good, but secrecy in itself is not a problem. A secret program can be well run and very productive (Lockheed Martin's Skunk Works, for example). If there are problems in the TPC, and that seems to be the case, they are being hidden by the secrecy. The first step is to lift the secrecy and make the real underlying problems known.

Then, and only then, can a new program be judged by Parliament. Indeed, the need for such a program is not even being debated, which is disturbing.

Millions of dollars might have been flushed by the TPC, wasted or even stolen. We just don't know. And if they kill the department and replace it before the audit is done, making these announcement while Parliament is not in session, we might never know.

I guess that's what is called clever planning by the Liberal government.