Atcon's 'extravagance' while asking for taxpayer help surprised auditor general

Auditor General Kim MacPherson says her office looked at 27 companies, 850 storage boxes and a million emails during its most recent review of the Atcon fiasco, and the findings left her struck by the "extravagance" of the company before it went bankrupt.

And then there was the corporate jet that, over three years, cost $8 million.- Kim MacPherson, auditor general

The Miramichi-based company was badly managed when the Liberal government of Shawn Graham made $63.4 million in loans guarantees, despite concerns raised by government officials, MacPherson said Wednesday.

While the money lost by New Brunswick taxpayers had largely been used for business purposes, she said, "there were a number of concerns with some of the stuff that we saw," she told Information Morning Fredericton.

Among those concerns was the personal spending that went on throughout a three-year period when the construction company was looking for government assistance, she said.

More than $700,000 in personal expenses went through company credit cards and a shareholder account under former company president Robbie Tozer, she said.

"There were some family members who were on the payroll, who had no apparent involvement with the operations at Atcon," MacPherson said.

"And then there was the corporate jet that, over three years, cost $8 million."

MacPherson released the findings Tuesday of her second audit of the Atcon group of companies, which went bankrupt in 2010. 

The audit covered what was happening within the construction company in the period leading up to its bankruptcy.

"For a company that was in such financial strain and struggling, and the fact they were coming to the government for assistance, it was just an extravagance," she said. "All of that we didn't expect to see."

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Other personal expenses included a luxury car lease, jewelry and and payments for a vacation property in Aruba.

Although some family members were making between $300,000 to $350,000 a year over the three years, MacPherson said she made a "judgment call" to not identify individuals over concerns that children may be involved.

"Our practice is not to name names," she said. "It's to fix the system overall." 

MacPherson said the Attorney General's Office is pursuing the recovery of lost funds with Tozer.

She and her audit staff had access to financial records, information held by the receivers and emails, but there was some information they did not have access to, she said.

But she stands by her findings based on the information available, she said.

The biggest issue was the government's decision to give up security on the loans to Atcon in October 2009. Victor Boudreau, the Business New Brunswick minister at the time, signed off on the move.

"That was the major flaw and failure that we found in the whole scenario," MacPherson said. "In the chain of events that took place, the key decision that cabinet made [was] when they gave up security.

"That was in there to protect the taxpayer so that if Atcon were to fail, any recovery from the sale of assets would come back to the province."

The main beneficiary after Atcon went bankrupt, she said in her report, was Scotiabank.

MacPherson said it's possible problems similar to the Atcon case could unfold again, and she wants to see the government implement 19 recommendations she made in 2015.

"As long as elected officials, cabinet, has the authority to make the final decision, it is possible it could happen again," she said.