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A long-simmering controversy over an immigrant investment program in Prince Edward Island has proved to be the scandal that will not die, flaring up repeatedly with allegations of corruption that local observers believe will be laid to rest only with a formal investigation.

Political tensions about conflicts of interest in a program that essentially auctioned off preferential immigration treatment ran high and occasionally boiled over.

Opposition Conservative MLA Mike Currie was charged in September with assaulting a heckler on the steps of the legislature that was the birthplace of Confederation. Liberal Premier Robert Ghiz lashed out in October at Mr. Currie, who suggested conflict of interest in the hiring of a bureaucrat's wife, by accusing him of being chauvinistic. And this month, the government derided as "inappropriate" an after-hours attempt by Opposition Leader Olive Crane to get information from a senior bureaucrat.

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The long-running program gave preferential access to would-be immigrants who invested hundreds of thousands of dollars in local businesses. Ottawa believed the province was wrong to let immigrants act as passive investors, and signalled the rules would be tightened in September, 2008. The province launched a recruitment blitz before the deadline, leading to new federal concerns about the sort of businesses - start-ups, for example - that were getting money.

Since then, a trickle of revelations has fed the growing belief that the program has had serious problems since the middle of the decade.

Provincial Auditor-General Colin Younker found improprieties, reporting that the provincial nominee program (PNP) had long lacked proper oversight and he identified conflict of interest by senior bureaucrats in the current and former governments. He also reported that some sitting politicians had accessed funds, but a government-dominated legislative committee voted in November to prevent him from naming them on the grounds that the conflict of interest commissioner had cleared politicians whose businesses obtained investments.

The bi-partisan nature of the problems offers limited solace to the government of Premier Ghiz, which replaced the Conservatives in June, 2007. Ottawa moved to tighten the rules on the Ghiz government's watch. And it was the Liberals' decision to expand the program so dramatically last year.

The provincial government approved businesses for participation but will not identify them, arguing that the investment was a private transaction between an immigrant and a company.

A local firm acting as an intermediary matched businesses with immigrant investors, Minister of Innovation and Advanced Learning Allan Campbell said, adding that government would "rely on the integrity of the intermediaries" to prevent favouritism.

"I can talk about oversight … but there are aspects of the program, basically, that were handled by other agencies," he said. "Whether it be intermediaries or whether it be the immigration agents or what have you."

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The province received 1,877 immigrant applications in the final six months under the old rules, more than double the entire previous year. Each had to be willing to put up $200,000 - prompting critics to call this a $400-million scandal.

That's approximately one-quarter the size of the budget tabled in Charlottetown this spring.

Amounts varied, but the program required approximately one-quarter of the money to be invested locally. This was called a "unit," and businesses could receive several. A slightly larger amount went to the agents who found the immigrants, and the intermediaries, companies that have played this role since before the Ghiz government took office. The remaining money was put in trust, eventually to be returned to the immigrant.

The talk in island barbershops and coffee houses is about the sense, borne out by the auditor's findings, that the well-connected got the money.

"This is what keeps this story festering, and it's not going to go away," said Ian Dowbiggin, a professor of history at the University of Prince Edward Island. "There's a lot of people [whose companies]were turned down and then they see how well other people did and they're mad, they're hopping mad."

And immigrants have also been unhappy with the program. A protest alleging unfair treatment drew police attention, language and welcome programs were criticized and only in the past few weeks did the government reveal that immigrants who left the country temporarily wouldn't lose a "good-faith" deposit.

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Many of the investors approved during the final days of the program have not yet arrived, but those who came earlier are voting with their feet. According to research released last month by the University of Prince Edward Island, three-quarters of the immigrants who came in the last part of 2006 had left by the time a follow-up was done this year.

"The way they operated this program has really given us the impression they wanted the money, not the immigrants," said Kate Liu, who moved to Charlottetown from Taiwan in 2007. "This is a beautiful small community but people still don't want to come because they don't want to deal with this government."

Mr. Ghiz, entering the latter half of his mandate, has sought with limited success to draw a line under the controversy. He criticized Ms. Crane for the level of recent debate and signalled he would focus on the future. But his opponent offered no sign that she would blunt her attack.

Ms. Crane hammered the government during the session that ended this month and her attempts to uncover more information at the Liberal-dominated public accounts committee were repeatedly voted down.

The involvement of people who were in the Pat Binns-led Conservative governments of 1996 to 2007 has some Tory supporters saying privately that their leader should slow her attacks. But Ms. Crane argues that Liberal actions raise more red flags.

In his annual report, Mr. Younker said bureaucrats were "directed" to approve questionable business applications in the last days of the 2007 election campaign that brought Mr. Ghiz to office. He did not reveal who was responsible.

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Mr. Younker also found conflict by three senior bureaucrats.

Two were highly placed in the Tory government. Peter McQuaid, then chief of staff to Mr. Binns, said after the auditor's finding that he did not realize he should not have accessed the program and would return the money. The auditor said recently there was no evidence he had done so.

Pat Dorsey, a senior policy adviser in the Binns government, said that an application from his wife was examined on its own merits and that he did not interfere.

The auditor also identified a conflict involving Brooke MacMillan, who oversaw the immigrant investor program as a deputy minister in the Ghiz government. He was in that role on July 31, 2008, when the program stopped accepting applications from island businesses.

On Aug. 5, 2008, Mr. MacMillan accepted an appointment as head of the Liquor Control Commission. Also on Aug. 5, the application process re-opened for two days, for what the government describes as administrative reasons. During those two days, 55 applications from island businesses were approved. Among those, the auditor said, businesses connected to Mr. MacMillan and his wife received investments totalling about $250,000.

Mr. MacMillan released a statement insisting he did nothing wrong. But after the auditor's finding, the Premier ordered him to return the money. He did so, the government said, and continues in his new job over Opposition calls for his dismissal.

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Prof. Dowbiggin said that the immigrant investor scheme "has the potential to become the biggest political scandal in PEI history."

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