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Rob Shaw: B.C.’s opposition parties demand probe into alleged government grant kickbacks

An electric vehicle manufacturer said it was solicited by the firm administering certain programs; the province says it has found no wrongdoing
The province says it has not found any wrongdoing concerning the administration of certain programs | Times Colonist

B.C.’s three opposition parties united this week to demand the auditor general probe a so-called “kickback scheme” involving one of the companies responsible for administering millions of dollars of government grants to clean technology projects.

BC United, BC Green and BC Conservative MLAs voted for an independent probe of accounting firm MNP, which the government has hired to administer at least two grant programs, but which is also facing allegations it demanded so-called “success fees” of as high as 20 per cent of the grant amount to help firms win money.

“Requiring 20-per-cent success fees on grants, success fees to the company that's actually doing the adjudication, if true, is wrong on so many levels,” BC United MLA Todd Stone said in the legislature.

“That practice, if it is happening, needs to stop. The only way that British Columbians will know is if there is actually an audit and investigation into this, and that's the role of the auditor general.”

At least one company has gone public with its concerns, Merritt-based Edison Motors, a new startup that is building electric semi-trucks used for logging, and which sought provincial aid to expand its operations.

The company has applied unsuccessfully for several grants through at least four different programs. It was rejected for $3 million grants under the CleanBC Electric Advanced Research and Commercialization (ARC) program, as well as the CleanBC Go Electric Commercial Vehicle Pilots (CVP) program—both of which MNP administers on behalf of the province.

After the rejection, MNP reached out to Edison Motors to suggest it hire them to be more successful in winning government money, said company co-founder Chace Barber.

“They made it kind of clear, if we want to get a government grant we have to go through them,” Barber said in an interview.

“Morally, this feels fucking wrong,” he added.

Edison Motors wanted the grant money in part to purchase a trucking facility at a shuttered sawmill in Terrace, and convert it into an electric logging truck production plant. The move would allow the company to upscale production of their emissions-free heavy duty logging trucks, hire another 50 staff, help decarbonize the forestry sector and expand the company’s reach.

Currently it is the only company in North America to make a full plug-in electric semi-truck, said Barber. But so far, it has not been successful in any grants.

MNP denied any conflict in its role as both the administrator of some government grants, and as a private firm trying to sell its services to clients as an expert on B.C. government grant procurement.

“MNP is careful to ensure there is no conflict with this type of service and programs that we consult on or help administer,” partner Todd Nash said in a statement.

“After looking into this situation, we can state that no conflict occurred and no one from MNP offered to provide services that relate to any program that MNP administers.”

B.C.’s Ministry of Energy, Mines and Low Carbon Innovation said there were no technical violations by MNP, because the grant programs in which the company stipulated a 20-per-cent success fee—the BC Centre for Innovation and Clean Energy fund, the BC Manufacturing Jobs Fund and the Investments in Forestry Industry Fund, for example—are not technically administered by MNP.

The forestry fund is federal, the innovation centre is a not-for-profit founded in part by the provincial and federal governments, and the forestry fund is run by Ottawa.

The ministry also confirmed MNP is not allowed to ask for fees paid out of public grant money. Yet there are ways around that provision, including asking clients to use existing business funds they had otherwise set aside if they did not receive grant funding, to keep the public grant amount whole. Still, the ministry said it investigated the issue and found no wrongdoing.

“Government requires MNP to have safeguards in place to ensure there is no conflict of interest in managing this specific grant process,” the ministry said in a statement.

“Following what happened with this company, MNP has told us that they have updated their processes to make sure businesses have clearer information.”

Edison Motors is not the only company upset at the CleanBC grant application processes, and the opaque role of MNP as both a consultant-for-hire and administrator in different streams.

“We have had subsequent examples brought forward to us from other individuals,” said Stone.

BC Conservative party leader John Rustad said he’s also “received evidence from numerous companies about this program.”

“Clearly, there is a serious problem with this program,” he said in the legislature.

“It needs to be looked into. It should be taken seriously by this government. Yes, the auditor general has the ability to look into it themselves, but clearly, government should be very concerned about how taxpayers' money is being spent on this, particularly from the carbon tax.”

Energy Minister Josie Osborne said the funding concerns related to MNP’s fees appear to relate to non-provincial programs.

“If there’s evidence that it’s around a government grant, then please would somebody provide that to us in my office?” she said in an interview. “That’s not what I understand has happened.”

Opposition MLAs said the confusing nature of the funding streams, fees, consultant relationships and provincial versus private streams necessitate a probe. That one company could use its government administrator work to leverage itself as a kind of gatekeeper to provincial funds is concerning, they said.

“There are hints that there's corruption here, coming from a party that's been appointed by government to distribute dollars for a clean energy plan, for a B.C. company that, fairly, wants to be subsidized by B.C. tax dollars,” Skeena MLA Ellis Ross said in the legislature.

“So 87 MLAs in this institution swore to uphold what this institution is supposed to stand for. We are not doing our job as MLAs if we allow this issue to be swept under the rug.”

Green MLA Adam Olsen said the allegations are a situation of “where there’s smoke, there’s fire.”

“This is exactly the work of opposition: to critique government programs and to ensure that they're being delivered fairly, to ensure that there aren't corporations and business and other entities that are unfairly benefiting from government programs … being in a position not only to take in the applications but also to adjudicate the applications, and then reaching out and saying: ‘Hey, we'll prepare the applications for you, at a fee,’” he said.

In the end, though, the opposition parties were unable to convince the NDP majority to allow the investigation.

“The auditor general has the ability to look into these matters if they choose to,” said Kahlon.

Chase said he’s disillusioned with the process. It was B.C. government officials who, when his company built its first truck, encouraged it to begin applying for grants to expand. He said he tried taking his concerns to Osborne’s office and had a meeting with her staff. But the only thing that happened, he said, is that his company was uninvited from a planned speaking engagement at a subsequent event.

“I know a lot of other guys like us, that are incredibly struggling,” he said.

“They’ve got innovative technology, and are doing cool things, and are all getting told no.”

Rob Shaw has spent more than 16 years covering B.C. politics, now reporting for CHEK News and writing for Glacier Media. He is the co-author of the national bestselling book A Matter of Confidence, host of the weekly podcast Political Capital, and a regular guest on CBC Radio.

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