Minister says money-losing investment fund wasn't meant to make money – Regina Leader-Post

The provincial government is defending an investment fund that lost more than $8 million by saying it was never meant to earn money, but to engage Indigenous people in the economy.

The Saskatchewan NDP challenged Crown Investment Corporation Minister Joe Hargrave to account for the loss to taxpayers in what Opposition critic Cathy Sproule called a “slush fund.”

During three hours of questioning in the Crown and Central Agencies Committee on Wednesday, Hargrave could point only to a handful of jobs created by some of the multi-million-dollar investments from the First Nations and Metis Fund.

One, worth about $1.8 million, eventually reached a welding company and was later written down to $250,000. It created four jobs, only two of which went to Indigenous people.

Another, which funded a risky $3-million potash investment, is now essentially worthless. It created no jobs, though Hargrave noted that it could have created many had it been successful.

“It wasn’t just about jobs,” Hargrave said Thursday. “It was about engagement.”

The government paid Westcap Management Ltd. a total of $3 million for that engagement. That includes additional money Westcap earned by managing a fund within the fund created in 2011.

Hargrave argued that creating that fund, referred to as the business development fund, was the right decision, even though Westcap was already being paid to manage just a handful of loans.

He noted that three of four investments made through the business development fund were largely or entirely paid back.

The fourth lost all but $200,000 of a $700,000 loan, with Hargrave blaming a downturn in the oil industry.

But Hargrave said the government wasn’t looking to earn a profit off the funds.

“We’re not doing these programs to make money,” he said, again pointing to engagement of First Nations people.

“We’d love to break even.”

All told, Hargrave estimated that somewhere between 84 and 185 jobs were created through the First Nations and Metis Fund, though he was unable to say how many of those stemmed from loans made under the previous NDP government.

Sproule spent much of Wednesday evening challenging Hargrave on the loans that flowed to the welding and potash companies.

She accused the government of a “gamble” with taxpayer dollars, and argued that shareholders came out better than taxpayers.

“What does the minister have to say to taxpayers who have been left holding the bag?” she added on Thursday.

Hargrave has defended the loans by noting they weren’t provided directly to the welding and potash companies, but to a First Nation-controlled firms that invested in them.

But Sproule suggested that, one, at least, seems like a shell company. Its primary shareholder is a numbered company and its current director has little notion of its operations, she said.

In her view, that speaks “volumes” about the investment.

When contacted by the Leader-Post, the director of Infinite Investment, Wendy Gervais, said she has no idea where assets related to the fund’s investment are currently located. But she also noted that she only recently became a director.

Sproule said that throws Hargrave’s whole argument into question.

“Creating a numbered company and calling it an investment company, I don’t think it’s fair to call that engagement,” said Sproule.

“This is beyond belief,” she added.

Sproule has pointed out that some of those connected to the loans have links to the Saskatchewan Party. Westcap CEO Grant Kook has donated to the party, for instance.

Sproule has faulted the government for failing to produce him at committee for a more detailed account of his investment decisions.

Hargrave said the government isn’t giving up on getting back some of the money lost through the fund.

“We’re trying to make sure that we put ourselves in a position where we can recover as much of those funds as we can,” Hargrave said.

awhite-crummey@postmedia.com