Canada red-faced over government-owned planemaker
The Canadian government has been embarrassed by accusations that Canadair has been flying high on publicly financed wings. The government-owned aircraft manufacturer, it is charged, has been padding its order books, overpaying its executives, and producing an executive jet, the Canadair Challenger, which was beset by mechanical problems and did not live up to its performance ratings.
The political furor is because Canadair has borrowed $1.5 billion of government money and is accountable not to Parliament but to the Cabinet. In the House of Commons, Conservative critic Sinclair Stevens said the potential loss for taxpayers could be $2.3 billion. Mr. Stevens was also critical of the payroll, with 100 top executives at Canadair paying themselves a total of $9.5 million a year. He described this as excessive and said the executives obviously had a vested interest in exaggerating the success of the Challenger.
A former assistant deputy minister of industry in Ottawa, Anthony Guerin, who was responsible for advising the government on increasing its financial commitment to Canadair, left the government in 1981 to become a vice-president at the company.
Only 73 of the aircraft have been sold - Toronto financier Conrad Black owns a lavishly decorated model - and company officials now admit that sales were not as rosy as they pictured. ''We recognize we have a lot of soft orders and we are reviewing them,'' one said. By soft orders he means that companies or governments are free to cancel their plans to buy the Challenger.
The same official could give sales figures only for 1981, when Canadair had revenue of $285 million. He did not even have nine-month figures for 1982.
The auditor general of Canada, Kenneth Dye, whose job it is to keep an eye on the federal government's spending, does not have any jurisdiction over Canadair or De Havilland Aircraft of Toronto, the other government-owned aircraft manufacturer. In his 1982 report to Parliament, Mr. Dye described the aircraft companies as ''big risks.''
Prime Minister Pierre Trudeau has said there will be no official inquiry, and no audit by Mr. Dye. Instead there will be a report to Parliament in June by the recently formed Canada Development Investment Corporation, which has the job of looking after Ottawa's growing corporate portfolio. This agency is headed by Maurice Strong, a staunch Liberal Party supporter who has been described as Mr. Trudeau's favorite businessman.
The scandal centers on the Challenger aircraft. There have been two versions of the plane and the problems are with the first, the 600 series. It had mechanical snags and did not have the range promised by the manufacturer. The second, the 601 series, is said to be everything the first one was supposed to be. It is equipped with new General Electric engines which are said to improve performances.
In addition to the Challenger, Canadair produces the CL-215 water bomber and has supply contracts for civil and military aircraft.
De Havilland Aircraft of Toronto has just rolled out its Dash 8 commuter airliner. It needs more government money to go into full production. But the scandal at Canadair may mean less cash for a company with a stable of dependable STOL (short-takeoff and landing) aircraft, from the Beaver, Buffalo, and Twin Otter to the Dash 7.