#cews

The Canada Revenue Agency has denied or adjusted $458 million in funds disbursed to employers through a pandemic-era wage subsidy program as a result of a partially completed auditing process.

The agency is releasing a report Monday that offers detailed findings of its audits of the Canada Emergency Wage Subsidy program. The bulk of the findings cover the period ending March 31, but the report also offers more up-to-date figures as of Sept. 29.

The CEWS program subsidized businesses' staff wages by 75 per cent to help companies hold on to their employees as governments enacted shutdowns during the COVID-19 pandemic.

Full article

"By any financial measure, TFI International Inc. has had a great pandemic. Revenue at the Montreal-based trucking conglomerate, excluding fuel surcharges, rose in 2020. Net income jumped by double digits, in part because TFI moved quickly to cut its work force expenses. The company made a string of 13 acquisitions during the year. And after COVID-19 first gripped Canada last March, the company paid a higher dividend in every quarter compared with the same period a year earlier. Along the way, TFI and its subsidiaries also collected nearly $75-million in payments under the Canada Emergency Wage Subsidy program, making it one of the biggest recipients in what is by far the single largest spending initiative in the federal government’s history."

"If the intersection of a growing bottom line and a government bailout seems disconcerting, it shouldn’t. There’s no indication that TFI did not legitimately qualify for payments. The fact that a company posted solid results, paid out higher dividends, had money to spare for acquisitions and laid off workers to contain costs is no barrier at all to receiving CEWS payments – despite sporadic rhetorical feints to the contrary by the Liberal government. And if TFI’s experience seems unusual, it isn’t. TFI has lots of company, according to a Globe and Mail analysis that married Ottawa’s list of thousands of CEWS recipients to the Statistics Canada database on Canadian corporate parents and subsidiaries, and then cross-referenced that to the companies listed on either the Toronto Stock Exchange or the TSX Venture Exchange, according to S&P Global Market Intelligence."

"The result: a database showing that 388 publicly traded companies (or their wholly owned subsidiaries) received more than $3.6-billion in CEWS payments as of late January (when the Canada Revenue Agency took down the federal government’s online listing of companies). Citing privacy restrictions protecting tax filers, Ottawa has refused to release a full accounting of CEWS subsidies paid. Despite that very limited disclosure, the Globe database is the most comprehensive picture of how large companies have accessed the program. But there are many limitations and omissions. Several companies did not disclose the subsidy amounts they received. And companies such as Bombardier Inc., which reported in securities filings it had received payments, had no direct name matches for itself or any of its wholly owned subsidiaries in Ottawa’s online listing, and were excluded by our methodology."

"Like TFI, many of the 387 other companies weathered the pandemic with relative ease, despite qualifying for assistance under CEWS. The program’s goal was to preserve the jobs of millions of Canadians, but in many cases, payments padded bottom lines to the tune of millions of dollars."

The Globe and Mail, May 8, 2021: "Wage subsidies were meant to preserve jobs. In many cases, the $110.6-billion response padded bottom lines," by Patrick Brethour, Tom Cardoso, David Milstead, and Vanmala Subramaniam

The Globe and Mail, May 8, 2021: "CEWS: A massive subsidy, shrouded in secrecy," by Tom Cardoso

Canada Emergency Wage Subsidy, January, 2021 (Excel Sheet, Zip Download)

FP Investigation: As CEWS flowed in, dividends flowed out

Article content continued The CEWS payments, she said, were exclusively used by Mullen, which received $10.3 million in subsidies during the third quarter and paid out nearly $9 million in dividends, to bring back employees who had been laid off, provide additional sick days and to create new jobs, she said. “The actions taken above in respect of our dividend, the NCIB and CEWS were done to…

Kevin Carmichael: On the question of CEWS and dividends, investors will ultimately decide

Article content continued “They blew it,” said Cheryl Kim, a Toronto-based consultant who advises corporate leaders on reputation issues. “You saw a bunch of leaders who were not willing to make a hard decision and say, `You know what? That money was given to us to help keep our company functioning well.’ The fact they gave it to their shareholders, to me, is an absolute abdication of leadership…