For those of you not from Prince Edward Island, let me introduce you to a $400,000,000 scandal that is gradually picking up steam and will no doubt be making the news for some time.
The Executive Summary
- PEI has an Immigrant Nominee Program. Through this program someone from “away” can invest $200,000 into a business located on PEI and in turn get fast tracked to Canadian citizenship.
- Matching these investors with Island companies is done by private firms. Those firms take a handsome cut to facilitate the deal.
- The Provincial Government holds $25,000 in good faith. This is promised to be returned to the investors if they live on PEI for one full year.
- In the spring of 2008 it was announced that the program would be terminated in September of 2008 (last month).
- Between the announcement in the spring and the end of the program last month 2,000 investments were made. That is compared to the 100-300/year made during the previous years of the program.
- Total: $400,000,000 cash injected into PEI in only six months.
The Issues
- Many immigrants who were involved in the program years ago have not seen their 25,000 good faith deposit returned to them. They are now protesting. The provincial government called the cops on the very peaceful protesters yesterday to get them removed from their office buildings at closing time.
- There are allegations of fraud. There are certain rules that are required to be followed for a company to qualify for an investment. For example real estate, construction, and professional service businesses do not qualify for investment. Qualified companies can only receive one or two rounds of investment. There are reports of businesses that do not qualify receiving investment, companies started for the sole purpose of receiving investment, and members of the local government being involved in businesses that have received investment that may not have been qualified. The RCMP have been called in.
- The provincial government is mucking about and is really playing this poorly.
First Hand Experience
- For the record silverorange, or any of our associated corporations (we have a few), have never received immigrant investment. We qualify, and we've had very serious debate about using the program, but we have never received any cash nor have we even applied. I'll make a post on this in the future as it's a whole story in an of itself.
- Earlier this summer I was approached by one of the immigrant investor brokers (private firm). His offices are on the same street as ours. I bumped into him outside one day. He asked what we did. I told him we have two main businesses 1) A web development company and 2) A real estate company. He said, and these were his words the best I can remember them:
The internet company qualifies without any issue. Real estate does not qualify but we're creative just like you.
... and he winked at me. A good business, and perhaps relationship, rule-of-thumb. NEVER GET INVOLVED WITH SOMEONE WHO WINKS AT YOU.
There is a scandal of great proportions brewing. There are individuals who have gamed the system and should be investigated. There are also others who have been diligently following the rules of the program. The RCMP should investigate ALL brokers and all businesses who have received investment.
The provincial government should get their act together. Get translators right away and pay them whatever it takes to clear this up and regain the respect of those who have invested here in our province. Set up the big boardroom in their development office with the correct officials, translators, and paperwork. Start processing the immigrants whom they owe 25,000 to right away. Get them in one by one, do the paperwork. Cut a cheque if they qualify. Explain to them why they don't qualify through translators if they don't. If this isn't dealt with with dignity, wisdom, and speed PEI will get a lot of mud on its face.
The provincial government also needs to apologize to those protesters that they called the police on. Shame on them. They should apologize even if those who were protesting were there because of a misunderstanding.
There is one piece of information I can't seem to put my finger on. One of the protesters was quoted that he invested “$20,000 for a language deposit”. Does anyone know what that means and where that money goes or how it is used?
If anyone else has any information about this program please comment here as there are a still a lot of holes in the press:
Comments
Charlie - October 2, 2008 2:06 pm
Did they have to invest $200,000? The guy in the story says he invested $105,000 plus the language cash and the good faith...$150,000 total?
Stephen Pate - October 2, 2008 2:17 pm
There are so many articles and stories to cover, it's hard to keep up.
We try and check out the site
http://liberalmillionairesclub.wordpress.com/
Charles - October 2, 2008 4:18 pm
I believe the $20k "language deposit" is part of the $100K that the Government keeps in escrow. It's meant as an incentive so that the investors are motivated to learn the local language so they can better fit in and get their money back. Similar to the $25k deposit that you get back if you live in the host province for one full year.
Just a note: some people seem to think this is a PEI only program started by the Liberals. It's a Federally backed program available in all provinces (PEI was just popular because we had the quickest turnaround on the paperwork) that was introduced when the PC's were in power on PEI. It's gone through various forms over the years, which probably accounts for the different investment amounts and number of units a company can qualify for.
I will say that I whole-heartedly agree that the provincial Liberals are screwing this up royally though. I think that deferring to the existing RCMP investigation is probably a good idea, but they way they are phrasing it sounds like they are covering it up. And conflict of interest commissioner or not, MLA's shouldn't have been applying for these things directly.
Dan James - October 2, 2008 4:45 pm
It seems the government got their act together somewhat today. Banning the media though? Boo...
Alan - October 2, 2008 5:11 pm
$400,000,000 is about 10% of the gross provincial product, if the 2007 Economic Review published this summer is to be believed - or about...ummm...200% of the potato crop cash receipts (look at page 17). Sure you have noticed that much extra cash laying around?
Dan James - October 2, 2008 5:24 pm
Alan, there are a lot of "financial services" buildings popping up around the PEIBD block with generic names. Maybe that's where they are hiding the money.
Here at the office we refer to the $400,000,000 as "half of the confederation bridge."
I'm sure a lot of business owners bought some really nice boats this summer.
Peter Sampson - October 3, 2008 6:37 pm
It was good to see Mr. Ghiz on Compass remark how neither himself or his family members received any PNP money. How many people in this discussion thread can say that?
Scarecrow - October 5, 2008 12:14 pm
Dan,
Points:
1) Over 2000 new immigrants between April and July according to CBC : 400,000,000 million in 4 months.
2) A waiting list of 5 to 10 years for immigrants to obtain their visa according to CBC.
3) According to Richard Brown when asked on TV last week:
- investee companies receive the funds before the immigrant gets the visa.
- if an immigrant doesn't obtain his visa, the money invested must be returned ( "paid back" )to the immigrant.
4)According to Richard Brown responding to Oliver Moore from the Globe and Mail: "thought it would be a good way to raise capital".
5) 25% of the money goes to lawyers and agents, 25% goes to investee companies, 50% of the money is cash managed by the government and that 50% is to be refunded to the immigrant within 5 years. That 50% represents $ 200,000,000.
Questions:
Who manages the $200,000,000? Who benefits from the interest?
Are all these 2000 immigrants really willing to move to Canada under this program knowing that it will take them maybe 5 years to obtain their visa?
On the other hand, wouldn't it be a great opportunity if you were a whealthy man from China, Dubai, and Syria to place your money offshore in PEI for five years? Would you really bother about the visa?
Can a jurisdiction act as a clearing bank or an underlying guarantor pretending to facilitate visas for investment leveradge purposes operating with offshore financial intermediaries?
Justin - October 5, 2008 2:28 pm
This situation is quickly becoming a full blown Scandal. The Premier needs to get this quickly under control or else he may not be Premier very long.
This is without a doubt the most slimy scandal I have had the mis forthune to hear about.
If even half the rumours heck if even 2% of the rumours are true heads should roll right into a jail cell.
Having the Premier defend his MLA's saying there was nothing wrong with them accessing this program once they were elected is really really wrong on so many levels.
If the MLA's were such good business people and this program has been around for 20 years like everyone says why didn't they access it before they were even elected.
As a younger eprson I am finding all the denials and commnets from the Politicians becoming very sickening.
I seriously hope the Mounties are called in and quickly and charges are laid.
This stain that is growing on PEI will cover the whole place very soon.