Audit Flags $3.5B in Bad Loans, Weak Oversight in Canada’s COVID Business Aid
A pandemic loan program that distributed $49.1 billion to Canadian small businesses suffered from poor governance and unclear accountability, Canada’s Auditor General said Monday, while government officials defended the program as a crucial emergency measure.
The audit found no federal organization accepted full responsibility for overseeing the Canada Emergency Business Account (CEBA) program, launched in March 2020 to help businesses weather COVID-19 shutdowns.
Export Development Canada (EDC), tasked with administering the program, awarded $209 million in non-competitive contracts to a single vendor, Accenture, with insufficient controls over contracts and costs, the report said.
While EDC successfully disbursed loans to 898,000 businesses during the pandemic, approximately $3.5 billion went to ineligible recipients, the report found. Administrative costs totaled $853 million.
“The Department of Finance Canada and Global Affairs Canada did not provide effective oversight to ensure the program was managed with due regard for value for money,” the report stated.
The audit criticized EDC’s contract management, noting the Crown corporation “gave the vendor too much control over key aspects of contracts” and “failed to exercise basic controls” in monitoring payments aligned with work performed.
The report also found EDC’s plan to collect defaulted loans “lacked forecasted costing, performance management, and other key elements.”
The Department of Finance Canada disagreed with the auditor’s recommendation to provide oversight of administrative costs, stating it has “no legislative requirements” to oversee EDC’s program expenses.
Shortly after the report’s release, Deputy Prime Minister Chrystia Freeland defended the program’s rapid rollout, saying it “saved businesses from bankruptcy” during lockdowns.
“While the Auditor General offers some good and useful recommendations, this report fails to properly acknowledge that CEBA was designed and delivered during a global pandemic,” Freeland said in a statement with Small Business Minister Rechie Valdez.
As of March 2024, about 83% of disbursed loans have been repaid or forgiven, with $28.1 billion repaid and $12.4 billion forgiven. However, $8.5 billion remains outstanding, with collection efforts facing delays.
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