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CIDA still funding development firm it sued in 2010

By Michelle Zilio | Mar 20, 2013 2:47 pm

The Canadian International Development Agency (CIDA) is still funding a firm it sued for more than $173,000 in 2010 and which eventually filed for bankruptcy protection, iPolitics has learned. According to Quebec court documents, CIDA sued CRC Sogema for $173,044.22 in October 2010. CIDA asked CRC Sogema to repay the amount which was unjustifiably paid to the company for its Support in Implementation of the Technical Education and Professional Training Reform (AMOR-ETFP) project which operated in Guinea, a West African country, from 2001 to 2008. The court case revealed that CIDA agreed upon a $12,845,505 contract for the AMOR-ETFP project in June 2001 shared between CRC Sogema, the Universit de Sherbrooke and Universit du Qubec Trois-Rivires. The project wrapped up in 2008. However, court documents show CIDA and CRC Sogema had problems along the way. In 2004, both universities pulled out of the AMOR-ETFP project, making CRC Sogema the only signatory with CIDA on the project. CRC Sogema CEO Michel Ct said he did not know why the universities pulled out of the project, as he was not overseeing the project at that time. He did, however, say the three parties came to an agreement. According to court documents, in 2005, CRC Sogema presented a modified project plan to CIDA, but failed to outline detailed budgetary provisions. The company finally presented a detailed budget for the final instalment of the AMOR-ETFP project to CIDA in June 2007, which called for a staggering 318 per cent increase in external Canadian consultants. But in October 2007, CIDA informed CRC Sogema that, due to

unexplained lines in the companys budget proposal, it was going to have to suspend funds for the project until an agreement was reached on the changes. According to Ct, this portion of the budget was partially approved during a technical meeting with CIDA and other partners. However, the other portion of the budgetary approval process which is finalized with a management meeting, according to Ct was never completed because the CIDA official in charge of the meeting was removed from the file. We werent on the same wavelength, said Ct. As more time passed, Ct said the company was left with no choice but to charge CIDA in order to complete the project on time. If theres no (management) meeting but it was approved by the technical aspect, then you can go on. And thats what we did. We did deliver exactly what we intended, said Ct. The money was there. But when it came time for CIDA to reimburse the company, the department did not follow through because the spending was never approved in a management meeting, said Ct. We had all the approvals of CIDA during that period when we billed that $173,000, said Ct. They came back and said, Well, it doesnt work that way because the management committee didnt say yes. CIDA eventually sought to get the $173,000 back in the 2010 lawsuit. According to court documents, some of the expense differences between CIDA and CRC Sogemas files included more than $33,000 in plane tickets and more than $10,000 in employee holiday time. The lawsuit eventually was settled out of court, according to documents. While Ct refused to elaborate on the details of the settlement, he said a part of the $173,044.22 was paid back to

CIDA. Ct said this is the only dispute CRC Sogema has had with CIDA since 1989, when the department starting funding the company. He said the lawsuit did not harm the companys relations with CIDA, and applauded the departments spending regulation practices. CIDA is very tight on verification habits, of the projects and the financials of the projects, said Ct. Theyre doing their job and, on our part, were doing what we have to do. iPolitics discovered the court case following its report Tuesday that CIDA had provided more than $90 million to CRC Sogema since May 25, 2011, when it filed for bankruptcy protection. According to an order paper response from International Cooperation Minister Julian Fantino, CRC Sogema is the only entity to have received funding from CIDA while being under legal protection from creditors since 2006. Ct said the company was only under bankruptcy protection for a two-month period from the end of May to July 2011. Fantino said CIDA continued to work with the organization after it filed for bankruptcy protection because it continued to fulfill its obligations. On Monday, his office said CIDA took action to mitigate risks to the Crown when CRC Sogema was under legal protection from creditors and it continues to monitor the situation closely. Fantinos office did not respond to requests for comment about the lawsuit at press time Wednesday. For Massimo Pacetti, the Liberal MP who has been pressuring the Conservatives for more information about CRC Sogema, the 2010 lawsuit is troubling. He said he has been asking for answers since 2011, when he first learned about CRC Sogemas financial woes, but was not aware of the CIDA lawsuit against the company. Theres obviously a problem with the way CIDA does its due diligence, said Pacetti. Instead of working with them, they have to in turn take them to court and after that they continue to do business

with them. Its just totally unacceptable. Pacetti said he has been in contact with two individuals he would not name them who completed contracts with CRC Sogema in Haiti and are now owed money by the firm. According to court documents, the companys total liabilities amount to more than $8 million. CIDA continues to fund 12 CRC Sogema projects in countries such as Morocco, Burkina Faso, Mali, Haiti and Guyana. And in a March 12 press release from CIDA, the organization said it would soon begin working with the State Bank of Vietnams Banking Supervisory Agency to help Vietnam modernize and strengthen its banking system and financial relations. According to its website, CRC Sogema, founded in 1984, is a leader in the field of management of international development projects.
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