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November 7, 2008
For immediate release

Auditor General’s Examination of Hog Plant Released

Executive Council

The Auditor General’s examination of the failure of NOFG PEI is being publicly released today after it was provided to the Provincial Cabinet on Friday.

“The report reveals that the original work done on the NOFG file led to its ultimate failure,” said Provincial Treasurer Wes Sheridan. “The loss of taxpayers dollars is troubling, but the current government will use the Auditor’s observations and recommendations to substantially improve the way public funds are invested in the future.”

Among the reports key findings are:

∙ Two non-resident employees and two consultants of NOFG were paid the following for 16 months of work:

- Salaries - $442,000

- Bonuses - $20,000

- Consulting Fees - $234,000

- Travel Reimbursements - $348,000

∙ The former government also permitted a series of wire transfers and inter-company loans from NOFG PEI that the Auditor felt violated the loan agreement with the Lending Agency.

These included:

- $499,541 to a holding company (owned in part by the Quebec owners of NOFG) that included an advance of $345,000 so that the company could buy the plant;

- $336,000 paid to a consulting company owned by the NOFG president.


∙ In 2006, the former Conservative administration “waived” a requirement that the private investors invest $2.8-million in capital improvements to the plant. These capital improvements were for food safety and operational efficiency upgrades.

∙ Changes in the final Purchase and Sale agreement had a negative affect on the working capital of the company of $1,423,000.

∙ Less than a week before the last provincial election, an audit by Canadian and American authorities resulted in a Notice to Delist the NOFG facility and revoke its export license.

“Shortly after taking power, the new government agreed to provide $1.6-million in working capital to allow the plant to operate. Although we decided to support the plant initially, we also initiated a thorough program of due diligence to examine the viability of the plant and to re-examine the willingness of the Quebec owners to invest their own money into this operation,” Mr. Sheridan said.

“The failure of the owners to meet those commitments – and the poor quality of the original deal – led us to the inescapable conclusion that this plant could not be saved.

The estimated total loss to Government is $4,303,000.

“As government, we regret the loss of taxpayers’ dollars – and expect the Public Accounts Committee to thoroughly examine the Auditor’s findings. In the meantime, we are following through on the recommendations, and the current government will learn from the mistakes of the past.”

Copies of the report will be available at Island Information Service, 11 Kent Street, (902) 368-4000 and online at

Media Contact: Erin Mitchell
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