OTTAWA, September 22, 2005 — Industry Canada today released a status report on audits into the compliance of some recipient companies with two provisions of their funding agreements with Technology Partnership Canada (TPC).
The release of the report, which also summarizes the steps taken by the Department as a result of its audit activities and findings to date, meets a commitment made by the Honourable David L. Emerson, Minister of Industry, to provide public information on the course of the audits before the end of the month.
The focus of the audits is on two terms and conditions of the companies' contracts with the program:
A requirement that any person used by a TPC applicant company to assist in obtaining TPC funding, and who is required to register as a lobbyist, is so registered; and
A prohibition against any TPC applicant company paying a contingency or "success-based" fee to a person or a company it has engaged for assistance in securing TPC funding.
A routine audit initially uncovered the evidence of company non-compliance with its agreement. A subsequent forensic audit found four companies to be in breach of their agreements, and these companies have agreed to pay to the Government an amount equivalent to the contingency fees that were paid or payable by the companies to the lobbyist.
An external compliance audit of 47 additional companies is ongoing, and preliminary results have been received. 21 companies have been found to be in compliance. Four companies have been found to be in breach of one or both of their contractual provisions regarding lobbyists and contingency fees.
Minister Emerson announced that three of these companies were today sent letters of default which provide them 30 days to rectify the breach of their agreements. One other company has already remedied its breach through agreeing to pay to the Government the amount that was paid or payable as a contingency fee.
The preliminary results also suggest that seven other companies appear to be in breach of the terms of their agreements; however, the auditors are undertaking additional audit work on these companies to provide sufficient evidence to determine a conclusion on their compliance status. Audit work also continues on the remaining 15 companies.
"The fact that these companies breached the terms of their signed contracts is unacceptable and will not be tolerated," said Minister Emerson. "The report shows that the Department acted quickly to investigate these issues, and has been diligent and rigorous in identifying non-compliant companies."
In addition, the report shows that since these compliance issues surfaced, TPC has implemented new steps and safeguards, specifically:
to ensure that all officials dealing with TPC applicant companies are vigilant in ensuring that relevant conditions are honoured;
to ensure that applicant companies are better informed of the requirements; and,
to require applicant companies to explicitly attest several times during the application process that they are compliant with all the conditions.
The Minister pledged to act firmly if the ongoing audit uncovers further breaches. Financial settlements will be required for any funds paid out as contingency fees. The Auditor General and the Comptroller General have both been informed of the audit work, and have indicated that they agree with the approach the Department is taking.
Minister Emerson announced on September 20, 2005 that the TPC program will be wound down. Details on the new Transformative Technologies Program (TTP) will be available in the new year.
"We will make absolutely sure the new program performs to the highest standards of governance and due diligence," said Minister Emerson. "Companies must respect the terms of their contract with the Government of Canada and with taxpayers."
The Department will seek outside advice to ensure the new program fulfills this pledge.
The Minister said that despite the company compliance issues uncovered by the Department, programs such as TPC, and the new TTP, perform a valuable service in ensuring early stage research and development thrives in Canada.
"We stand behind the investments we have made, and will continue to make, because like the companies we partner with, we know that the potential benefits are great," said Minister Emerson.
The Status Report Regarding Identified Issues Related to Company Compliance with the terms of their Technology Partnerships Canada Contribution Agreements, and related documents, are available at: http://tpc-ptc.ic.gc.ca/epic/internet/intpc-ptc.nsf/en/hb00477e.html
For more information, please contact:
Christiane Fox
Office of the Honourable David L. Emerson
Minister of Industry
(613) 995-9001
Media Relations
Industry Canada
(613) 943-2502
