Forensic Audit of DynaTek Ordered

ECONOMIC
DEVELOPMENT/TOURISM--Forensic Audit of DynaTek Ordered

The Nova Scotia government, the Royal Bank and Quorum Growth Funding Corp. have ordered a forensic audit of DynaTek Automation Systems.

"There have been some serious allegations made about DynaTek during the past couple of weeks," said Manning MacDonald, Minister of Economic Development and Tourism. "We want to get to the bottom of this."

The computer storage systems company was forced into receivership Jan. 8 after five years of operations in Nova Scotia. KPMG has been asked to complete an initial forensic audit to determine whether any company funds or other assets were improperly used.

"DynaTek was brought to Nova Scotia by the former government, but it's been a concern to us for some time," said Mr. MacDonald. "Last fall we worked with the bank and other major owners to put new management in place and to restructure the company. Now with the change in control, we're able to have a closer look. We're determined to make sure that every dollar of taxpayers' money was used for the intended purpose."

At its peak, DynaTek employed more than 70 workers at its Bedford plant and had annual sales approaching $100 million.

"We've invested in many high-tech companies in this province, and the record is very good," said Mr. MacDonald. "Our overall loss rate is just four per cent -- considerably less than most other jurisdictions. Companies like Keane and Fast Lane Technologies are doing better than expected, and Mentor Networks just announced a major deal worth $20 million. DynaTek is a very visible aberration, but an aberration nonetheless."

A forensic audit is a specialized and highly detailed investigation into the financial records of companies that have gone out of business. The findings of these investigations can be used in a court of law. The initial forensic audit is expected to take several weeks. If it uncovers irregularities, the province will order a full-scale investigation.

"We still believe in the information technology sector," said Mr. MacDonald. "We'll continue to invest in IT and other worthwhile projects. And if things go wrong, we'll find out why. If there are lessons to be learned, we'll learn them."