Auditor general won't get extra funds for new Atcon probe

The Gallant government has changed its tune on whether the auditor general will get extra money for a new investigation of the Atcon fiasco.

One day after saying he would let a supposedly independent committee of MLAs consider the request, Finance Minister Roger Melanson told question period there won't be any funding available.

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"If the auditor general feels she wants to do more assessment on that file, we'll fully co-operate," he said.

"But she has a budget and she will have to work within that budget."

On Tuesday, Melanson said "the process to go through will be done independently."

He said the legislative administration committee, which sets the auditor general's budget, "will consider what is being asked."

Melanson would not speak to reporters Wednesday about what had suddenly changed overnight. The committee hasn't met since his Tuesday comments.

Late Wednesday, a spokesperson for Melanson contacted CBC News to say Melanson still supports LAC making the decision independently.

Auditor General Kim MacPherson said Tuesday there were still "unanswered questions" about the Atcon fiasco, in which taxpayers lost $70 million through a series of loan guarantees to the Miramichi company.

MacPherson reported earlier this year that the previous Liberal government of Shawn Graham approved the assistance over the objections of civil servants, who warned Atcon was on the brink of collapse.

But she said Tuesday there are still questions about why the government of the day made those decisions, and about what Atcon did with the money it borrowed as a result of taxpayer guarantees.

'Mixed signal'

Opposition Leader Bruce Fitch called Melanson's contradictory comments "a mixed signal."

MacPherson said Tuesday she'll go ahead with the audit even if extra funding isn't approved and "the bills will be paid."

She wouldn't estimate how much funding she'd need but said a similarly complex, special audit of a bail-out of the Caisse Populaire de Shippagan cost $1 million because of the expert forensic accounting required.

MacPherson's annual budget is $2 million.

Under the Auditor General Act, the legislative administration committee sets the auditor general's budget and forwards it without revision to the Department of Finance, which incorporates it into the main budget estimates.

Normally, if there are additional costs, the auditor general would go back to LAC to request additional money.

There's no specific provision in the act for what happens if an auditor general spends money that hasn't been approved.

MacPherson cited the example of former conflict-of-interest commissioner Patrick Ryan, who spent more money than he had in his budget to investigate an Atcon-related conflict accusation against former premier Shawn Graham.

Ryan got the funds he needed when the PC government of David Alward was in office. He eventually ruled Graham had been in a conflict of interest because his father sat on the board of an Atcon subsidiary.