Ford government sent almost $1B to businesses not eligible for COVID-19 aid or which lost less money than they were given, auditor general finds

Thestar.com
Dec. 2, 2021

Haste makes waste.

In a rush to get COVID-19 aid out the door, Premier Doug Ford’s government sent almost $1 billion to thousands of businesses that weren’t eligible for it or were given more than their losses warranted, charges auditor general Bonnie Lysyk.

Lysyk found a “troubling” absence of controls that resulted in the approval of “suspicious” applications -- including from businesses with addresses outside Ontario -- because of a focus on speed and a lack of verification.

As a result, she said $210 million was spent on grants to small businesses that weren’t eligible for them, and $714 million was paid to cover losses that businesses didn’t actually incur.

“I understand that the government was dealing with an unprecedented crisis,” Lysyk wrote in her 1,300-page annual report released Wednesday.

“But even in a crisis, systems should be in place to make sure that only eligible businesses received taxpayer dollars, and program funds reach those who need it most.”

Ford acknowledged his scramble to help small businesses, but stressed they were in “desperate need” amid lockdowns and restrictions.

“Because of those grants, companies are still in business today,” he said in Mississauga where he announced plans to build a new Mississauga Hospital and expand the Queensway Health Centre across from Sherway Gardens as part of a 10-year, $30.2-billion plan.

“Unfortunately, you’re going to see some fraud.”

The auditor’s annual report also faulted the Ontario Cannabis Retail Corp. for weak controls to prevent minors from buying cannabis, a lack of timely treatment for 60 per cent of patients experiencing heart attacks, a failure of the Ontario Securities Commission to collect $378 million in fines, lax oversight of private career colleges, and “increasingly understaffed” Ontario Provincial Police detachments.

As well, Lysyk criticized the Progressive Conservative government’s frequent use of minister’s zoning orders to speed local development, warning the measures lack “transparency.”

She added the controversial proposed Highway 413 from the Highway 401 at Milton to Highway 400 in Vaughan is “inconsistent” with land-use planning policies.

On the pandemic payouts, she blasted Ford for excluding some businesses in the accommodation, dry cleaning, laundry, manufacturing, transportation, logistics, wine and brewery sectors while others got money they shouldn’t have.

For example, $210 million in Ontario small business grants of $10,000 to $20,000 went to 14,500 small businesses that did not meet the eligibility criteria. The program was intended for businesses that were required to close during lockdowns or were severely restricted and lost more than 20 per cent of their revenue.

“Given the amount of money, the absence of better controls or assessment processes is troubling,” Lysyk said, noting that the government has written off the grants as not recoverable.

It took until seven weeks after the launch of the program to set up a system to “flag” applications from businesses with addresses outside Ontario, Lysyk noted.

Because the small business grants started at $10,000, businesses that lost less than that still received that amount -- including some that lost as little as two cents or had no revenue change at all, resulting in overpayments of $714 million, the report said.

“Over 51,000 recipients received more than $939 million in grants in comparison to their total reported losses of $225 million,” Lysyk wrote, noting that the lucky businesses comprised 46 per cent of the total who applied.

But Economic Development Minister Vic Fedeli maintained that what the auditor calls a $714 million “overpayment” doesn’t reflect the realities of the pandemic.

“The $225 million in losses only represents one month of losses suffered by those small businesses,” Fedeli said.

Another troubled aid program, the Ontario Together Fund, resulted in its share of disappointments, Lysyk said.

The fund was created to give companies up to $2.5 million each to create products such as ventilators, masks and sanitizing equipment for the pandemic emergency response. One company that received $1.8 million went bankrupt, and 15 of 54 projects aided with the grants have been delayed, with their products not yet ready for the market.

Another $16 million was given in property tax and energy cost rebates to firms that were not eligible, although $850,000 has since been recovered from 229 businesses, the report said.

However, Lysyk’s audit makes no mention of the alleged theft of $11 million in pandemic relief aid that has led to criminal charges against two Ontario bureaucrats fired in the wake of the scandal.

“I know that there are issues,” she said. “We have been involved in followup.”