DANIEL LEBLANC in Ottawa TU THANH HA in Montreal Andrew Badia's sock company got more money under the Transitional Jobs Fund than either Alberta or Manitoba.
His goal, with the help of the $8.1-million federal grant, was to transform Iris Hosiery Inc. into the undisputed sock leader in Canada, and then take on the world.
"Globally, we'll control all socks," he once told a reporter.
The federal grant awarded in 1997 to Iris Hosiery was the single biggest contribution to a business under the TJF -- and a perfect example of what critics say has gone wrong with the program.
The $300-million TJF program was one of the programs that was included in an audit last year that found mismanagement in Human Resources Development Canada.
Mr. Badia obtained his federal grant after he pledged in his application to invest $55-million in expanding his company, in part to buy 1,730 knitting machines.
He told the government that, as a result, he would create 3,000 jobs. A year after he got the grant, he told the magazine Les Affaires that he would have 6,000 staff by 2002.
Former HRDC minister Pierre Pettigrew gushed about the grant's impact on a poor part of Montreal at the official announcement in 1997. "I congratulate the company directors upon making so important a decision, which will revitalize the east end of Montreal," he said. "I am not even considering the indirect benefits of the project," Mr. Pettigrew added.
At last count, however, Mr. Badia delivered less than half the number of jobs he promised to HRDC. Still, that has not prevented HRDC from giving him three-quarters of the TJF money, or $6-million.
Competitors in the sock industry, some of whom were suffering through hard times when Iris Hosiery got its grant, and the Reform Party, are accusing Human Resources Development Canada of failing to do its homework before awarding funds to Iris Hosiery.
They say the federal government should have known that Mr. Badia's promise to create 3,000 jobs was unrealistic, and that giving such a large grant to one player in the sock industry would devastate competitors. In addition, they say Ottawa should have been more careful when it gave money to Mr. Badia, who is a Liberal supporter and a man with a history of legal problems.
Critics say the government gave money to Iris Hosiery with only one thing in mind -- creating jobs in Montreal -- without giving any thought to the impact on the industry.
HRDC was unable to comment on the case yesterday, even though a request for a status report was made early in the week. A call to Iris Hosiery was not returned.
Mr. Badia, now 41, came to Canada in 1974, the son of an Italian immigrant.
Since 1983, Mr. Badia has had several run-ins with the law relating to driving offences, including convictions for drunk driving and driving without a licence.
Mr. Badia started at Iris Hosiery as a mechanic in 1982, and became a partner in 1986. He is now sole owner of the company, which has been expanding since the mid-1980s. Even long-time sock manufacturers show admiration for its ability to grow.
Still, Iris Hosiery has never fulfilled all of its obligations under the 1997 grant, and the government suspended payments last year after paying out the $6-million. Industry watchers say it would have been impossible for Mr. Badia to triple his work force in three years, the promise that got HRDC to open its chequebook.
"There are people in government who, if they believed in [those predictions] hadn't done their math, didn't know the industry and knew nothing about basic economics," said a spokesman for McGregor Socks of Toronto, who asked not to be named.
The company was hit hard by a three-week strike in 1999 when employees wanted a boost in their salaries, which were about $8 an hour. The workers, mostly Haitian, Pakistani and Latino immigrants, also walked out for three days in 1998, complaining of low wages and harsh working conditions that included compulsory searches of their bags at the end of their shift.
The company made $30-million less than it predicted in 1998, according to an HRDC document obtained by the Reform Party under access-to-information legislation.
Reform said the government should have done a thorough background check on Mr. Badia, especially since he was getting so much money under TJF.
"If you're flouting the law, putting other people in jeopardy, even when you've been enjoined not to do that, that's pretty serious and . . . that's an issue when you're giving someone access to other people's money," Reform MP Diane Ablonczy said in an interview.
Ms. Ablonczy said the government might have been blinded by the fact that Mr. Badia is a contributor to the Liberal Party. His company gave $475.76 to the Liberals in 1994, $200 in 1995, $3,044.14 in 1996 and $5,750 to the local Liberal candidate in the 1997 election, Yvon Charbonneau.
When the grant was announced, the riding was in the hands of the Bloc Québécois. A few months later, Mr. Charbonneau won the seat.
Two weeks after the grant announcement, sock-maker Vagden Mills of Trenton, Ont., and a Harvey Woods plant in Cornwall, Ont., closed. The Iris grant may not have been the direct cause of the closings, but company officials said it was a factor. Tim Denton, who was president of Vagden, once told The Globe and Mail that news of the Iris grant came just as he was negotiating a refinancing of his company.