EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
The standing committee further recommends that the Government of Nunavut, in its response to this report, provide a detailed update on the status of the Nunavut Business Credit Corporation’s work to “develop quantifiable performance measures and annual reporting practices to enable an objective assessment of the corporation’s success in fulfilling its statutory mandate to stimulate economic development and employment in Nunavut.”
The standing committee further recommends that the Government of Nunavut, in its response to this report, clarify the extent to which the Nunavut Business Credit Corporation’s formally-defined role as a “blend of being a lender of last resort and a developmental agency for Nunavut businesses” is consistent with its statutory mandate and is complementary to the role of the Nunavut Development Corporation, which makes equity investments in private entities.
Issue: Governance
A significant number of individuals and entities play roles within the governance frameworks for the Nunavut Development Corporation and the Nunavut Business Credit Corporation.
The chairs and members of the boards of directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation;
The Minister responsible for the Nunavut Development Corporation and the Nunavut Business Credit Corporation;
The Presidents/Chief Executive Officers of the Nunavut Development Corporation and the Nunavut Business Credit Corporation;
However, there has been a lack of public clarity as to where the ultimate decision-making authority rests with respect to such matters as the:
Final approval of the annual corporate/business plans of the Nunavut Development Corporation and the Nunavut Business Credit Corporation;
Final approval of the annual reports of the Nunavut Development Corporation and the Nunavut Business Credit Corporation;
Final approval of the annual Ministerial Letters of Expectation to the chairs of the boards of directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation; and
Final approval of the annual operations and maintenance budgets of the Nunavut Development Corporation and the Nunavut Business Credit Corporation.
In November of 2007, the Auditor General of Canada issued an unprecedented denial of opinion on the Nunavut Business Credit Corporation’s financial statements.
A number of actions were subsequently taken to address these concerns, including the relocation of the Nunavut Business Credit Corporation’s offices from Cape Dorset to Iqaluit.
It is important to acknowledge the progress that has been made.
In November of 2012, correspondence from the Office of the Auditor General was tabled in the Legislative Assembly.
In his letter to the Minister responsible for the Nunavut Business Credit Corporation, the Auditor General noted improvements in the Nunavut Business Credit Corporation’s governance and financial reporting.
It should be noted that neither the Nunavut Development Corporation Act nor the Nunavut Business Credit Corporation Act have been substantially amended since April 1, 1999.
Testimony provided by the Acting Chair of the Nunavut Business Credit Corporation’s board of directors indicated that:
“At our board meetings, we talk about how much more autonomy we can have as an arm’s-length corporation.
Sometimes we feel that the legislation should reflect that.
I’m trying to remember a particular one that we felt needed change.
As you say, the Act is very old and it doesn’t always reflect the realities of today.
Some of the reporting requirements are not indicative of the corporation being a mature corporation, for lack of better words, that they feel that we have followed our mandate and recovered the corporation to a state where we should have the power to deal with certain issues without always having to go to the Minister.
Some of them are reporting requirements that probably don’t add to any more assistance to you, I guess, as people who have to read these reports that we submit to.
As an arm’s-length corporation, I think it’s important that we have the ability and that’s only after we have proven that we can do the mandate the best we can with the resources that we have.
Obviously the $1 million threshold is a big one because they have the ability to go up to $40 million and our goal to even reach $25 million is way below the $40 million that we could be authorized to give out.”
The Nunavut Business Credit Corporation’s 2013-2014 annual report indicated that the corporation’s board of directors “has recommended to the Minister [of Economic Development and Transportation] that the maximum lending limit be increased from $1.0 million to $2.0 million, [because] the lending limit has not been updated since the Nunavut Business Credit Corporation Act came into force in 1991.”
This recommendation was repeated in the Nunavut Business Credit Corporation’s 2014-2015 annual report.
This issue was discussed in some detail during the Legislative Assembly’s recent consideration of the 2015-2016 main estimates of the Department of Economic Development and Transportation.
This change would require the Legislative Assembly to approve an amendment to section 37 of the Nunavut Business Credit Corporation Act.
However, the extent to which the Minister of Economic Development and Transportation supports the recommendation made by the Nunavut Business Credit Corporation’s board of directors is unclear. It should be noted that the standing committee has no specific opposition to the recommendation.
Section 20 of the Nunavut Development Corporation Act requires that the corporation’s board of directors establish an “investment committee, an audit committee and a personnel committee.”
However, testimony provided to the standing committee during its September 24-25, 2015, hearing suggested that this provision is outdated and is not actually being followed in practice.
The President of the Nunavut Development Corporation stated that:
“The corporation is not that large.
Many years ago, we went towards an Executive Committee approach consisting of a Chairman, the Vice-Chairman, and a Secretary, with the Executive Committee assuming responsibilities for those three particular items identified in the legislation.”
Following the establishment of Nunavut in 1999, the Government of the Northwest Territories created a new Business Development and Investment Corporation (BDIC) in the year 2005 by combining its development corporation and business credit corporation into a single entity.
In 2008, a report was commissioned by the Government of Nunavut on this issue as it related to the Nunavut Development Corporation and the Nunavut Business Credit Corporation.
This report, which was tabled in the Legislative Assembly on March 12, 2008, recommended that the Government of Nunavut establish a new “Nunavut Enterprise and Investment Corporation” in Rankin Inlet by combining the existing Nunavut Development Corporation and Nunavut Business Credit Corporation into a single entity.
Ultimately, however, no amalgamation occurred.
The advisability of revisiting this recommendation was raised during the standing committee’s September 24-25, 2015, hearing.
However, a clear position on the issue was not offered by witnesses from either the Nunavut Development Corporation or the Nunavut Business Credit Corporation.
The standing committee recognizes that the 2008 report was prepared in the context of the Auditor General of Canada’s unprecedented denial of opinion, in 2007, on the Nunavut Business Credit Corporation’s financial statements.
However, it should also be recognized that both the Nunavut Development Corporation and the Nunavut Business Credit Corporation exist to achieve complementary goals: creating employment for residents, generating income for communities, fostering economic development and encouraging economic diversification.
It should be noted that the 2014-2015 annual reports of both territorial corporations list 9 individuals who sit on the board of directors of the Nunavut Development Corporation and 7 individuals who sit on the board of directors of the Nunavut Business Credit Corporation.
However, only one individual out of the total of 16 directors sits on the boards of both entities.
The standing committee observes that even if amalgamation of the two territorial corporations were to be conclusively rejected, there is no clear rationale for not increasing the number of individuals who sit on the boards of directors of both corporations.
These “co-appointments” would serve to enhance the capacity of both boards to provide strategic direction to their respective corporations in a manner that is more mindful of the other entity’s priorities, initiatives and operations.
The standing committee recommends that the Minister responsible for the Nunavut Development Corporation and the Nunavut Business Credit Corporation table in the Legislative Assembly, at the earliest opportunity, all approved governance and operating policies of the boards of directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation.
The standing committee further recommends that the Government of Nunavut’s response to this report clarify, in detail, the respective authorities of the chairs and members of the board of directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation, the Minister responsible for the Nunavut Development Corporation and the Nunavut Business Credit Corporation, the Presidents and Chief Executive Officers of the Nunavut Development Corporation and the Nunavut Business Credit Corporation, the Financial Management Board, the Executive Council and the Public Agencies Council with respect to the:
Final approval of the annual Ministerial Letters of Expectation to the Chairs of the Boards of Directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation; and
The standing committee further recommends that the Government of Nunavut’s response to this report clarify, in detail, its position concerning the recommendation made by the board of directors of the Nunavut Business Credit Corporation regarding amendments to section 37 of the Nunavut Business Credit Corporation Act.
The standing committee further recommends that the Government of Nunavut’s response to this report clarify, in detail, the extent to which section 20 of the Nunavut Development Corporation Act is being currently followed by the corporation’s board of directors.
The standing committee further recommends that the boards of directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation formally submit a comprehensive set of specific recommendations for specific amendments to the Nunavut Development Corporation Act and the Nunavut Business Credit Corporation Act to the Minister responsible for both territorial corporations for consideration.
The standing committee further recommends that these recommendations be submitted no later than September 1, 2016, and that they be subsequently tabled in the Legislative Assembly during the fall 2016 sitting of the House.
The standing committee further recommends that the boards of directors of the Nunavut Development Corporation and the Nunavut Business Credit Corporation formally consider the advisability of amalgamating the two corporations into a single entity.
The standing committee further recommends that the boards’ recommendations concerning amalgamation be submitted to the Minister responsible for both territorial corporations no later than September 1, 2016, and that they be subsequently tabled in the Legislative Assembly during the fall 2016 sitting of the House.
The standing committee further recommends that the Minister responsible for the Nunavut Development Corporation and the Nunavut Business Credit Corporation seek opportunities to increase the number of individuals who serve on the boards of directors of both the Nunavut Development Corporation and the Nunavut Business Credit Corporation.
Issue: Public Reporting Practices
During the standing committee’s September 24-25, 2015, hearing, significant attention was paid to the public reporting practices of both the Nunavut Development Corporation and the Nunavut Business Credit Corporation.
The Government of Nunavut’s annual reports on grants and contributions clearly identify the recipients of financial assistance from different departments.
The Government of Nunavut’s annual reports on procurement, contracting and leasing activities clearly identify companies and individuals that have been awarded contracts by different departments, Crown agencies and territorial corporations.
Although the annual reports of the Nunavut Development Corporation clearly identify the private ventures that have received equity investments from the corporation, the annual reports of the Nunavut Business Credit Corporation do not explicitly disclose the identities of recipients of loans or other financial assistance.
It should be noted, however, that photographs of a number of identifiable individuals have been published in recent annual reports of the Nunavut Business Credit Corporation under the heading, “NBCC Clients.”
The corporation’s rationale for including the photographs of a select number of clients in its annual reports is unclear.
The 2014-2015 annual report of the Nunavut Business Credit Corporation indicates that as of March 31, 2015, the corporation’s total loan portfolio stood at $23,196,954.
The annual report also indicates that:
“Section 47 of the [Nunavut Business Credit Corporation] Act also authorize[s] the Government [of Nunavut] to advance to the corporation an amount out of the Consolidated Revenue Fund not exceeding $50,000,000 for the purposes of providing financial assistance to business enterprises.
In 2014, the Financial Management Board set the working capital advance limit to $40,000,000.
These advances are repayable to the Government of Nunavut on such terms and conditions as the Minister of Finance may determine.”
It is the standing committee’s position that the funds loaned by the Nunavut Business Credit Corporation to businesses and individuals are, ultimately, public monies, and should be subject to the same level of transparency and public disclosure as any other form of financial assistance provided by the government to individuals and enterprises.
Consequently, the onus is on the government to clearly demonstrate what policy objective is achieved by shielding loan recipients from public disclosure.
Although the standing committee recognizes that some businesses and individuals might desire to have their identities shielded from public disclosure when applying for loans or other financial assistance from the Nunavut Business Credit Corporation, the standing committee does not accept the premise that such businesses and individuals should be entitled to be shielded from public disclosure.
During the standing committee’s September 24-25, 2015, hearing, the opportunity was provided to witnesses from the Nunavut Business Credit Corporation to publicly offer a clear and compelling rationale for the benefits and merits of secrecy in the corporation’s current lending practices.
No clear or compelling rationale was offered for how such secrecy serves to help fulfill the corporation’s statutory mandate of “stimulating economic development and employment in Nunavut.”
The standing committee notes that section 15 of the Nunavut Business Credit Corporation Act provides that:
Any information received by an employee of the Corporation or a director about a business enterprise that applies for a loan, bond, guarantee or indemnity is confidential and shall not be disclosed by the employee or director
(a) except as may be required in the administration of this Act or the  regulations or any proceeding under this Act or the regulations; or
(b) unless the business enterprise consents.
The standing committee further notes that the Declaration of Applicant section of the Nunavut Business Credit Corporation’s Application for NBCC Assistance form explicitly requires applicants to agree to the following condition:
“If financing is provided, the applicant provides permission for release of their name (if an individual) or the company name (if a company) to the public.”
The standing committee further notes that the Nunavut Business Credit Corporation’s Business Client Consent Form for Use of Commercial and Personal Information explicitly requires clients to agree to the following condition:
“The undersigned Client also acknowledges that as a territorial corporation and department of the Government of Nunavut, both the Nunavut Business Credit Corporation and the Department of Economic Development and Transportation are subject to the obligations imposed on public government by the Access to Information and Protection of Privacy Act of Nunavut, including the obligation to release information.
The undersigned client authorizes and expressly consents to the disclosure of all information, including “personal information” of any individuals (including the Client) relating to the Loan application and the Loan, to the public or to members of the public, at any time and from time to time following submission of the Loan application, where such disclosure is required pursuant to the Access to Information and Protection of Privacy Act of Nunavut, and provided always that any proposed disclosure complies with the procedures and other requirements of the Access to Information and Protection of Privacy Act of Nunavut.”
It should be noted that the issue of public disclosure of the identities of recipients of loans or other financial assistance from the Nunavut Business Credit Corporation was also raised during the standing committee’s September 28, 2015, hearing on the 2014-2015 annual report of the Information and Privacy Commissioner of Nunavut.
During her testimony to the standing committee, the Information and Privacy Commissioner stated that:
“Let’s start by saying that companies per se have no privacy rights under the [Access to Information and Protection of Privacy] Act.
Only individuals have privacy rights.
In my opinion, if I were asked to do a review recommendation on this, I would recommend that the names of the corporations and the amount they receive be disclosed.
The name of the person and the amount, off the top of my head, I can’t think of any reason why that kind of information shouldn’t be disclosed …”
It is important to note that the Nunavut Business Credit Corporation’s lead witness publicly acknowledged the prerogative of the Legislative Assembly to statutorily ensure full public disclosure of the identifies of recipients of loans and other financial assistance from the Nunavut Business Credit Corporation.
Section 31 of the Northwest Territories Business Development and Investment Corporation Act explicitly provides that:
The annual report that the Corporation is required to submit under section 96 of the Financial Administration Act must include a specific category setting out the following information in respect of each business enterprise that the corporation provided financial assistance to or in which it made an investment in the financial year:
The annual reports of the Northwest Territories Business Development and Investment Corporation clearly disclose the recipients of all forms of financial assistance from the corporation.
It is important to note that there is no evidence to suggest that this public disclosure has reduced the demand for financial assistance from the corporation, or meaningfully impeded it from fulfilling its mandate.
Questions arose during the standing committee’s September 24-25, 2015, hearing concerning the extent to which the corporations’ annual reports on procurement, contracting and leasing activities clearly distinguish between award values and actual expenditures.
Questions arose during the standing committee’s September 24-25, 2015, hearing concerning the extent to which the Nunavut Development Corporation’s equity investments in private ventures include elements of ownership, direction and control of the ventures.
Although the detailed notes to the corporation’s annual financial statements make reference to “partnership units,” “share subscription agreements” and “fixed cumulative preferential distribution entitlements,” the standing committee is of the view that the corporation’s annual reports would benefit from greater clarity in this area.
Sections 30 and 36 of the Nunavut Business Credit Corporation Act provide the Minister responsible for the Nunavut Business Credit Corporation with significant authority to confirm or reject recommendations and decisions made by the corporation’s board of directors in respect to loan applications.
The Minister may also review applications (i.e. appeals) made by rejected loan applicants under certain circumstances.
Although testimony provided to the standing committee during its September 24-25, 2015, hearing indicated that no recommendations or decisions made by the corporation’s board of directors in respect to loan applications had been overturned by the Minister in recent years, it is nonetheless important to recognize that the Minister’s current powers under sections 30 and 36 of the legislation are significant.
Consequently, it is important that the exercise of these powers be accounted for in the corporation’s annual reports.
Subsection 78(1) of the Financial Administration Act provides that:
78. (1) Where the appropriate Minister and the Executive Council are of the opinion that it is in the public interest, the Minister of Finance may issue a directive to a public agency respecting its financial management and financial administration.
Although the recent annual reports of the Nunavut Business Credit Corporation clearly indicate that no such directives were issued during the fiscal year covered by the report, the recent annual reports of the Nunavut Development Corporation are not as explicit.
It should be noted that the Nunavut Development Corporation’s 2013-2014 annual report indicates that its current “investment policies and guidelines” and other related items were approved by its board of directors on June 24, 2010.
It should be noted that the Nunavut Business Credit Corporation’s 2013-2014 annual report indicates that “four manuals concerning credit management, administration and conduct, board orientation and accounting have received approval from the corporation’s board of directors and the Minister responsible for the Nunavut Business Credit Corporation.”
It should be noted that the Nunavut Business Credit Corporation’s current business plan indicates that the corporation has “entered into separate memoranda of understanding with the Baffin Business Development Centre, Kitikmeot Community Futures and the Atuqtuarvik Corporation.”
It also indicates that it is working to “formalize a relationship with the Kivalliq Business Development Centre.”
The standing committee recommends that the Government of Nunavut, in the interest of the greatest possible certainty and clarity, bring forward an amendment to the Nunavut Business Credit Corporation Act during the winter 2016 sitting of the Legislative Assembly that is explicitly modelled on the provisions that are contained in section 31 of the Northwest Territories Business Development and Investment Corporation Act.
The standing committee notes that this would allow the corporation’s next annual report to the Legislative Assembly for the 2015-2016 fiscal year to fully disclose the identities of recipients of loans and other financial assistance from the corporation, as well as the amounts of financial assistance provided to recipients.
The standing committee further notes that this would also provide an opportunity for the government to introduce the amendment to section 37 of the legislation that has been recommended on a number of occasions by the board of directors of the Nunavut Business Credit Corporation.
The standing committee further recommends that the Nunavut Business Credit Corporation, in light of the observations made in this report concerning the disclosure requirements that are presently contained in the corporation’s application and consent forms, clarify its position regarding its current practices in this area.