On December 8, 2006, Peter MacKay, then the federal minister overseeing the Atlantic Canada Opportunities Agency, and Rodney MacDonald, then premier of Nova Scotia, attended a press conference hosted by Christian Reinisch and Henric Bauermeister, the German directors of Cape Breton Island Developers Inc. Also at the event were MLA Alfie MacLeod, Enterprise Cape Breton Corporation director Rick Beaton, and Cape Breton Regional Municipality councillor Brian Lahey.
Cape Breton Island Developers was announcing a $300 million development to be called Louisbourg Resort Golf and Spa on 2,500 oceanfront acres a kilometre north of Louisbourg. The resort, promised the company, would “provide a world-class vacation destination which is unparalleled in the Atlantic Provinces… equal to Tremblant and Rockies.”
The resort would have two 18-hole golf courses (a championship course designed by English golfer Nick Faldo dubbed “The Fortress” and a Par 3 course), a conference centre, european spa and gym, tennis and squash courts, curling, horse stables, and art galleries. The resort would be surrounded by 300 luxury houses priced between $400,000 and $1 million.
MacKay and MacDonald welcomed the announcement of the development of Louisbourg Resort Golf and Spa, and at the press conference praised the developers for not relying on public money. However, reported the CBC:
Over the next two years, Enterprise Cape Breton Corporation — a federal Crown corporation created to promote and finance the development of Cape Breton Island — quietly provided $1.5 million, despite earlier assurances by the developer that no government funding would be used for the development. CBI Cape Breton Island Developers Inc. was not required to pay back the money.
That information was obtained through project documents made public by ECBC.
The money from the Enterprise Cape Breton Corporation was to build the resort’s sewer and water system, a system that has never been connected.
Moreover, the Atlantic Canada Opportunities Agency loaned the developers another $500,000.
But the development went nowhere, or at least nowhere much: only 10 houses have been built, and the golf courses and other amenities are nowhere to be seen.
And yet, according to a lawsuit filed this week in the Supreme Court of Nova Scotia, in October 2013, HarbourEdge Mortgage Investment Corporation loaned Henric Bauermeister $605,000 at 12 per cent annual interest, compounded every six months. The loan was guaranteed by Cape Breton Island Developers, the development company for Louisbourg Resort Golf and Spa.
A few months later, in March 2013, ACOA sued Cape Breton Island Developers for $433,000 outstanding on the $500,000 loan extended five years earlier.
According to the lawsuit, the $605,000 loan came due and was not paid. That month, HarbourEdge transferred ownership of the loan to a German company called Real Invest International GmbH (RII), which filed the lawsuit this week.
RII is claiming the full value of the loan plus interest, for a total of $875,020.29 as of June 1, 2016, plus 12 per cent annual interest.
The $2 million public agencies put into the company is apparently completely lost.
Stunning. Disturbing. Who’s minding the store and the public cash register? Another case of Nova Scotia decision-makers being played for fools, rubes and marks.
Last night after I read this piece, in an attempt to provide an historical list of failed Nova Scotia public dollar corporate investments over the past many years, I searched online for a couple of hours, but failed to find the specific historical, cumulative records sought. I lived away from the Maritimes, and even out of the country, in pre-internet years also, so my facts will not be as accurate on this as most. Suffice it to say, public dollars used for provincial corporate investment/promotion has had a history of highly questionable results: Heavy Water, Clairtone, Stora Enso, Trenton Works to name a few. Consider how far the dollars lost might have been differently used. There’s a societal benefit to having citizens gainfully employed, productive, contributing with dignity and a sense of satisfaction, but at what cost, and isn’t it time to examine different ways of support, other than through a succession of public-dollar infusion which has a record of ultimate doom?
We’re never going to get politicians to speak the painful, ugly truth that barring some miracle, the Atlantic region will never be or become an industrial or large-scale employment heartland. It’s not in the cards for us, given our geography, our climate, our culture, our natural resources. Each successive government toys with the status quo, attempting to present a positive picture that will get them re-elected. Long-term vision and short-term truth are anathema to that objective. Isn’t it time to consider a general wage in lieu of these ultimately-losing investment illusions? With proper policy design and implementation, wouldn’t it free up public dollars for greater return on investment and societal benefit in areas of infrastructure, transportation, institutions, etc.? Done properly, with a whole different attitude adjustment, it could and would leave individual dignity and self-respect intact, free up a magnitude of public dollars, and facilitate public planning and improvement by those competent to do it. Corporate feasibility is not in politicians’ wheelhouse – or their delegates, and that’s been long proven at public expense.