The Ontario government has written off a $445-million loan that was given to Chrysler during the 2009 global financial crisis, citing a lack of legal recourse to recoup the funds.
Ottawa wrote off its portion of the loan to the automaker – $2.6-billion – last year. That triggered a writeoff by the province of Ontario, said Emily Hogeveen, a spokeswoman for Rod Phillips, the province’s Finance Minister.
“The federal government wrote off their portion of this loan in March, 2018, as there is no legal recourse to further recover funds,” Ms. Hogeveen told The Globe and Mail in an e-mail. “This decision has no impact on our fiscal plan, as this debt was accounted for in the years following non-payment.”
General Motors Co. and Chrysler received billions in government loans and were forced to undergo restructurings following the global financial meltdown. At the time, Chrysler was divided into two entities. One went bankrupt, while the other continues to operate today, now under the name Fiat Chrysler Automobiles NV. The international firm, created when Chrysler merged with Fiat in 2014, reported net profits of €3.63-billion ($5.34-billion) for 2018.
For its part, Canadian subsidiary FCA Canada Inc. (formerly Chrysler Canada), said on Monday its debts are paid.
“In 2011, FCA Canada repaid all outstanding government loans that were due in full, with interest, six years ahead of schedule,” spokeswoman LouAnn Gosselin said in an e-mail, without specifying the amount.
While the new entity repaid US$7.6-billion to the Canadian, Ontario and U.S. governments in 2011, loans to the old, now-bankrupt entity have not been recovered.
The Ontario government lent a total of $961.2-million to the automaker – nearly half of which is still outstanding.
The loan writedown was recorded in the Orders in Council as part of a larger sum of $607.9-million, for the fiscal year ended March 31, 2019. The order was approved on June 20. The order did not state that the writeoff included the $445-million loan to Chrysler.
“Anomalies aside, most of this amount is typically made up of student loan write-offs, personal and corporate bankruptcies,” Ms. Hogeveen said.
Jasmine Pickel, interim Ontario director of the Canadian Taxpayers Federation, called the writeoff an “egregious” example of corporate welfare coupled with a “notable lack of transparency.”
“Not only should governments stop making these loans full stop, they should do everything in their power to recuperate this money still owed to taxpayers,” Ms. Pickel said in an e-mail.
With reports from Laura Stone
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