Dan James has commented on the Immigrant Investment program. I find his comment to be balanced and compassionate - nicely put, Dan.
Our island has been buzzing with rumour, accusation and mean spirited gossip - much of it driven by political interests. We hear names of journalists, publishers, lawyers, accountants, politician and politically connected businesses as having received units of investment. We even hear of former Deputy Ministers receiving more than the allowable number of units. Ian Dobbi-expert-on-everything has pontificated to the Compass viewing public, and even poor Premier Ghiz was called to face the wrath of Bruce Rainee.
The Island is buzzing. My interest in this is more to the process, rather than the recipient. Heck, I could probably tell you the names of many anyway. That we live in a bent politically corrupt society is seen by many, as a given.
Let us step back a bit and consider the number. The number that is bounced around is $400,000,000. That is a four followed by 8 zeros, people. That is one heck of a lot of loonies. With the Polar disgrace, I often said that most voters could not get their head around $30,000,000. In the same manner, most voters glaze over at a number as large as $400,000,000. They do, however, get somewhat stirred up as they can relate a small investment to someone they know - or know of.
What interests me is the process, and like Dan, I want to know where the money is. Where is the $400,000,000? I also need to have some degree of confidence that the Province does not have a financial exposure. Hearing that from the politicians is not sufficient. I need proof.
Much of what follows regarding the process, is what I have been told by reliable sources. I have not seen the documents, but based on what I have been told I have a degree of confidence it is accurate.
Initially we were told that the immigrant would invest $200,000 in a PEI business. This would be done after the immigrant had been vetted and met certain standards and requirements. In return for the investment, Canada would fast track application of Landed Status. Effectively, Canada is selling passports for $200,000. I wonder if many find the sale of our passport unseemly?
We are then told that $100,000 (half) of the investment is held in trust by the Province of PEI. We are told that this is to be paid back to the investor. That leaves $100,000 to be distributed. I am told that early applicants received $55,000 investment, with the remaining $45,000 going to the intermediary, accountants and lawyers. Lawyers and accountants being what they are, subsequently milked the cash cow a little harder (not realizing that the cow already had mastitis), with the result that later applicants received $33,000 for each unit of investment. In return for the cash, the recipient issues preferred shares to the investor, and is obligated to pay back $50,000 over 5 years by way of dividends. If this is done, the preferred shares convert to contributed capital. If this is accurate, how can a business recipient say publicly that they do not know who the investor is? If they have to pay dividends, they better know what name to put on the cheque. What happens if the dividends are not paid? In a normal business transaction of this sort, preferred shares would convert to common shares, which give voting rights to the investor.
That is what we have been told.
Now suppose the real process of transaction is that the immigrant is to deal with a facilitator. What if the immigrant is required to present a cheque to the facilitator (an individual who established a company specifically aimed at helping these poor misguided immigrants steer their way thru the unfamiliar maze of rules and regulations on our gentle island). What if the immigrant then borrows $90,000 from the facilitator and then immediately gives the facilitator back the $90,000? Huh? Poof, $110,000 just became $200,000. The $110,000 is distributed (of late) by sending $33,000 to the applicant, with the balance staying with the Intermediary, accountant and lawyer. If this was the case, where is the money for the trust fund? Smoke, pure smoke. Would a trust fund be anxious to return an investment if, well, the investment was never really made?
What if the above theory is accurate? We were originally led to believe that the benefit to PEI was 2,000 investors at $200,000 each = $400,000,000. What if the real number is $110,000 X 2,000 = $220,000,000. Poof, $400 million just became $220,000,000. What if the reality is that each of the 2,000 recipient actually received the larger $55,000 each - poof - $400,000,000 just became 2,000 X $55,000 or an investment in the economy of $110,000,000 and an investment in the intermediary, accountants and lawyers of $110,000,000. If we discount the suggested real investment by the amount represented by the units of investment that the accountants, lawyers and political cronies (or family members of aforementioned) managed to ‘score’ the benefit to PEI becomes even less.
More questions. How is the loan, made by the intermediary, recorded on financial statements? How is the loan receivable recorded? I suspect we will find that this is all on the financial statements of the recipients - with fulfillment of the dividend payment somehow cancelling the loan. More smoke.
Another question - and perhaps a spoiler - how will Revenue Canada be treating the whole process. I have heard they are already ‘looking at it’.
This one simply stinks. As Dan said, show me the money?
The decision to invoke the audit of the dreaded Provincial Auditor is a good political move. Now Bagnall will stop chirping, and everyone can throw up their hands and say we can’t speak about it while an audit is in process. More smoke. The audit will take a very long time - by then, other scandals will have moved to the front. The spinners are good at what they do.
Oh, one more thing. The recent embarrassing coverage of police removing immigrants from poor Richard’s building - nothing to do with the mythical $200,000 investment unit. Apparently, continuing to milk the cow, the immigrant was required to put up an additional $25K as good faith money. This would be returned in one year, presuming certain requirements were met. $25,000 X 2,000 = $50,000,000 which is allegedly held in an interest bearing trust.
From here, we can learn a bit more about the process.
Immigrant Partner Criteria Summary
- Have a minimum net worth of $400,000.00 Canadian dollars
- Use an Investment Intermediary approved by the Prince Edward Island Provincial Nominee Program
- Make a $200,000.00 Canadian dollars investment by way of preferred shares in an eligible Prince Edward Island company
- Become a director or senior management employee in the investee company (see “Immigrant as director or senior manager” under Investment Promotion and Matchmaking)
- Make a Good Faith Deposit of $25,000.00 Canadian dollars to be held by the Province of Prince Edward Island, to be returned on evidence of one year’s residency in Prince Edward Island.
- Ideal applicant is between the ages of 21 and 49 and no older than 55
- Have a minimum 12 years of education (high school)
- Have at least five years of management or business ownership experience in a sector with relevance to the Prince Edward Island economy.
- Have Language skills capable of being interviewed in English or French and if not must be prepared to make a Language Deposit of $20,000.00 Canadian dollars, held by the Province of Prince Edward Island to be returned on evidence of one year’s residency and a moderate level of proficiency in speaking, reading, writing and listening in English and/or French has been reached.
The above matters were discussed at the founding meeting of the Contrarian Party of PEI. Other matter on the agenda for the fist meeting was the proposal that all future elections have a check box for ‘none of the above’. If NOA wins the riding, within 90 days a by-election must be held, and NOA can be on the ballot again. This will give voters a legitimate way to protest the dismal choices that parties keep trotting out for us to hold our noses and pick the best of a bad lot, without spoiling or wasting our ballet.
Vote Contrarian!
