How New Brunswick recouped $2.7M of Atcon bailout money remains a mystery

The New Brunswick government is being tight-lipped about how it managed to recoup $2.75 million that provincial taxpayers spent bailing out a bridge project built by the Atcon Group.

The finance minister of the Northwest Territories confirmed last Friday that the territorial government recently sent $2.75 million to New Brunswick to settle "a matter that arises out of some litigation."

Caroline Wawzonek told the territorial assembly that it was connected to New Brunswick's 2008 loan guarantee of $13.4 million to the Atcon Group, the original contractor for the territory's massive Deh Cho Bridge project.

When Atcon was kicked off the project for faulty work, the provincial government was on the hook and had to pay the territorial government so it could cover extra costs.

New Brunswick's auditor general found in 2017 that the costs of Atcon's "deficiencies" in building the bridge went beyond the original $13.4 million.

That's why territorial MLA Kevin O'Reilly says he's baffled over why the government there would be returning $2.75 million to New Brunswick.

"I just don't know how we went from drawing down on this letter of credit, or whatever the arrangement was, to all of a sudden owing the government of New Brunswick $2.75 million," he said in an interview.

"I don't really have any answers." 

Opportunities New Brunswick spokesperson Abigail McCarthy said Wednesday that "a difference of opinion" arose between the two governments over what costs should be covered by New Brunswick.

She said they agreed to mediation last year and reached an agreement in December "to settle all claims," leading to the payment. 

Details of the dispute and the settlement will stay confidential, she said.

Wawzonek made similar comments in the territorial legislature last Friday.

"One of the things that entices any party to settle a dispute is to be assured that they can be provided some confidentiality rather than having to go through a fully public litigated process," she said.

The $2.75 million payment appeared in a supplementary budget bill debated in Yellowknife last week.

The $13.4 million loan guarantee New Brunswick offered Atcon for the bridge work was part of a larger package of money that created a major political controversy for the Liberal government of Shawn Graham in 2008-09.

The Graham Liberals advanced a total of $63.4 million in loans and loan guarantees to Atcon to keep the Miramichi company alive. Taxpayers lost almost all of that money when Atcon went bankrupt in 2010.

Auditor General Kim Adair-MacPherson conducted two audits into what went wrong, revealing that senior civil servants warned the Graham cabinet that Atcon was on shaky ground and that there was a high risk the province would lose millions.

But the Liberals approved the package anyway. One of the ministers at the time, Donald Arseneault, is now running for the leadership of the party.

Graham also became the first premier of New Brunswick to have been found in a conflict of interest because he was part of the decision, despite his father's links to Atcon.

Adair-MacPherson found that the company had "poor cost control" and accounting irregularities that put it in a "debt spiral" it could not escape. 

"Certain individuals" at Atcon spent company money on luxury car leases, jewelry, a vacation property in Aruba and personal flights on a company-owned private jet. 

The $13.4 million guarantee, issued in 2008, allowed Atcon to secure a line of credit it was required to get under the Deh Cho Bridge contract, a public-private partnership. The one-kilometre bridge spans the Mackenzie River.

Under the terms of the guarantee, New Brunswick had to pay the full amount to the Northwest Territories, which would deposit it in an account.

The territorial government would then draw money from the account to pay for fixes to the bridge and return whatever was left over to New Brunswick.

But Adair-MacPherson's 2017 report said the Northwest Territories ended up needing all of the money and then some to deal with the bridge's construction problems.