Canada Bailed Out Carmakers With Limited Data: AuditorAndrew Mayeda
Canada had limited information about the restructuring plans of General Motors Co. and Chrysler Group LLC when the government approved a C$13.7 billion ($12.1 billion) bailout for the automakers in 2009, federal auditors said.
The government didn’t receive the carmakers’ final restructuring plans before allowing the loans, despite imposing that as a condition in negotiations, the Auditor General of Canada said in a report released today.
The U.S. and Canada propped up GM and Chrysler after the financial crisis pushed the companies into insolvency, casting a cloud over North America’s automotive industry. GM received C$10.8 billion in total loans from the Canadian and Ontario governments, while Chrysler received C$2.9 billion.
The government has recovered C$3.8 billion from GM and C$1.7 billion from Chrysler, which was acquired by Fiat SpA in 2011. The government also converted about C$9.8 billion of the loans to GM into equity and still own 110 million shares, according to data compiled by Bloomberg.
Officials also did limited analysis of what concessions had been accepted by stakeholders such as unions, the extent of the companies’ health care and pension liabilities, and the ability of the automakers to repay, the audit found.
Today’s report highlighted C$1 billion that was placed in a separate account to be used for GM Canada’s pension plans, and was paid instead to the parent company in September 2009.
“Neither Industry Canada nor Export Development Canada had documents related to the use of the funds,” the report said. “In the absence of detailed information on the use of the funds, Industry Canada does not know to what extent the federal government’s financial assistance contributed to the viability of Chrysler Canada and GM Canada.”