N.S. business loan papers kept from auditor

Nova Scotia's auditor general says he has no way of knowing whether millions of dollars in business grants and loans were well spent, because the government has refused to hand over documents.

Jacques Lapointeslammed the secrecyatNova Scotia Business Inc. andcabinet's Industrial Expansion Fund, the two agencies used to funnel taxpayer money to businesses.

He said NSBI and the IEF withheld more than 200 documents related to financialassistance to companies.

"We have no way of knowing if, in fact, they were privileged documents," Lapointe said at Province House on Wednesday. "In this case, it turned out many of them were not. And we have no way to judge whether even if we agreed with the removal that what was removed was actually appropriate."

In a report released Wednesday, Lapointe said that withholding information constituted disregard for public accountability.He called it an "unwarranted" interference in the audit process and said he had to deny an opinion, which is considered the most severe sanction available to him.

"There's no good reason for denying information to the auditor general or any other auditor trying to provide reports to the House of Assembly," he said on Wednesday. "And so regardless of technicalities, the basic principle of public accountability is what's been violated here."

NDP withholds documents

While in Opposition, the NDP called the IEF a cabinet slush fund.

The NDP now says it has the right to withhold certain documents. The government cited solicitor-client privilege and cabinet confidentiality.

Finance Minister Graham Steele said the province plans to introduce legislation that will give the auditor general access to the documents he wants.

"This is a complex issue that will take time to resolve," Steele said in a statement.

Lapointe also chastised the Department of Health for refusing to provide information on mental-health services. He said the NDP cabinet ordered department officials to withhold related documents.