Thank you, Mr. Hawkins. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, when you take in the total scope of where we went with Sirius Diamonds NWT, we had to incur a number of factors that add up to this, and this includes going through the interim receiver process and having them manage the facility to the point of sale where we've gone to the courts and are waiting for that 30-day period to come to a close, which will be in June. The total cost to us as the GNWT, we're looking at approximately $10.7 million, and then you throw against that the estimated proceeds from the sale of the assets and what we have there at $4.5 million comes out to a difference of about $6.2 million or almost $6.3 million. Then we're further offset in future years, as I stated earlier, by sales of diamonds that have been trademarked with the polar bear trademark. That would bring us fees going forward. But the initial figures, the total loss is about $10.7 million, then you take the proceeds from the sale at $4.5 million and that's where we come up with our loss of almost $6.3 million. Thank you.

Thank you, Mr. Minister. Mr. Hawkins.

Thank you, Mr. Chairman, and thank you, Mr. Minister, for providing that clarification. I think that was very helpful. Seeing how we've mentioned the polar bear a few times, is this Minister in a position where he can inform me and this House as to what the cost of litigation was that the GNWT took against Sirius a couple years ago? What's the total cost of that legislation in regards to protecting or establishing a position that the GNWT owns that polar bear inscribed on the diamonds? If the Minister could provide that cost, I would appreciate it at this time.

Thank you, Mr. Hawkins. That line of questioning is off the topic. We're dealing specifically with Supplementary Appropriation, No. 4, and we'd like to keep our questions relevant to the discussion at hand. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, you're correct that that is not included in this process as it has not been calculated. That was a different action taken by a different department, so we don't have that information available today. Thank you.

Thank you, Mr. Minister. Mr. Hawkins.

Thank you. I'm probably dancing a line of being ruled out of order. I probably will end my questions at this point, but I do think speaking to the bigger picture with the trouble we've had with Sirius, I think we're forgetting the compound effect and we've had trouble in how much it's cost us in the bigger picture. Unfortunately, we're running out of days in this House to put questions with regard to our diamond subsidy program or a diamond program, and what benefit the GNWT has received as a whole. I think this has kind of raised questions -- it certainly has in my constituency and I know with other Members -- about how are we subsidizing the growth of the diamond industry and to what cost.

Negotiating agreements so we could supply 10 percent rough is a bit of a...I don't know; I think it's misleading, because at the end of the day we, at present, one person is the net benefactor, although we have a company separated by paper alone. So in theory, as I understand it, Sirius is owned by company A and Arslanian is owned by company B, yet the general shareholders are the same people.

At this time, if it's appropriate to ask a question with regard to the sale of Sirius, I would like to ask a question. Was a monopoly taken into consideration of the sale price of Sirius where we received $4.5 million because, as I see it, that 10 percent rough at this time is going to one group. Not that long ago we had four diamond cutting plants, if I have my numbers correct. One, Deton'Cho Corp no longer cuts diamonds; the second one which would be Laurelton, they have their own agreement to get a supply of direct rough; and, of course, the next two companies are relatively owned at the end of the day by the same shareholders. As I would see it, it's strictly an administrative matter where a piece of paper divides the monopoly. So the GNWT went very far in negotiating a 10 percent rough. Regardless of how much we actually get out of that is a different question, but at the end of the day one company is, in theory, monopolizing, or I should say one group of people are the net benefactors of that monopoly. Was that $4.5 million sale price built into the fact that the same shareholders would be the sole benefactors of that 10 percent rough? I'll leave that question with the Minister, with a small proviso; if four out of five are the same shareholders, at the end of the day, the way I see it, it's relatively the same shareholders. So would the Minister answer the monopoly question? Thank you, Mr. Chairman.

Thank you, Mr. Hawkins. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, there are four active cutting and polishing facilities in the city of Yellowknife. Two of them are operated by the same shareholders. Two of the agreements that we are involved with have the same proponents to them, with quite a big difference. Number one, this deal goes ahead with no further loan guarantees attached. The previous operation that was involved when we began reviewing our involvement in this still has a loan guarantee in place. They are the same shareholders, but they are different agreements and we're operating on that basis to ensure that we have covered every possible aspect of the deal to ensure that our guarantee is covered if in fact it ever comes into question again in the future. So there is not a monopoly. There are two companies controlled by the same shareholders that have a significant interest in the rough area, but they have agreements with the mine for that supply and they're being honoured, and we are cutting and polishing here in the city of Yellowknife. Thank you.

Thank you, Mr. Minister. Mr. Hawkins.

Thank you, Mr. Chairman. Maybe if the Minister could elaborate what are the four companies, because if I'm mistaken I'd appreciate the information. I understood it was Laurelton, Arslanian, Sirius and Deton'Cho Corp. To me this all links to this expenditure and I just want some clarification, because this expenditure is helping clean up the costs associated with the interim receiver stepping in. So as my final question, maybe if the Minister could clear that up and who is reaching into this negotiated 10 percent rough? As I said earlier, I think Laurelton has their own direct deals, so who would be the benefactors of the GNWT's negotiated 10 percent rough for these diamond companies? Thank you, Mr. Chairman.

Thank you, Mr. Hawkins. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, ITI is the department that is directly involved with the polishing itself, on setting up the 10 percent allocation for companies in the North. Maybe the Minister would have that information of who is actually being able to draw down on that 10 percent. Thank you.

Thank you, Mr. Minister. Mr. Hawkins, if you want to pursue that line of questioning, perhaps at question period might be another opportunity for you to question the Minister of ITI on the companies. We are dealing specifically with the appropriation bill before us. Mr. Hawkins.

Thank you, Mr. Chairman. If I may pose a question one more time in a different direction and I will accept a ruling graciously, if you think it's out of order, but I will say that it's linked to the $620,000 which all links to the bigger picture. The fact is we have one company now accepting that percentage of rough. So I guess if I can have my one question today, I'll accept that graciously with no further questions. If the Minister of ITI is able to answer that, who is drawing on that 10 percent rough? The Minister of Finance has said that there are possibly four. If we could just get that clarification today, I'll just leave it at that as my final question for today.

Thank you, Mr. Hawkins. Mr. Minister.

Thank you, Mr. Chairman. I believe Minister Bell is able to respond to that.

Thank you, Mr. Chairman. Three of the local factories are approved as northern manufacturers and are drawing down on the rough made available for northern manufacturers. The Deton'Cho Corporation, Canada Dene Diamonds that involves a company, Schachter and Namdar, is one of those companies; Arslanian with their original factory is another; and the third will be the new Sirius factory owned by the Arslanian shareholders. The one that is not drawing the 10 percent is the Laurelton factory which has agreements outside of that process.

Thank you, Minister Bell. We've got general comments. I'll go to Mr. Braden.

Thank you, Mr. Chairman. To the appropriation here regarding our loss on the diamond turnover here, I guess it really illustrates that this is a new enterprise in Canada and a risky one. There was a quick, steep learning curve. Perhaps is has plateaued a little bit now, but as we can see with these numbers here, Mr. Chairman, our government is still learning and obviously

learning the hard way, the very hard way, about going into these kind of ventures.

As an MLA here in the city and in the territory, Mr. Chairman, I am a supporter of governments going into areas where private enterprise does not have the wherewithal or the infrastructure or the ability to take a risk when the certainty of its outcome is not all that great. If government can go in on these kinds of new groundbreaking ventures, such as setting up secondary diamond shops, and help absorb the risk with the private sector, then I think that is a worthwhile endeavour and in principle I support it.

Now that we have taken our lumps on this particular one -- this isn't the only one that the taxpayer has had to absorb some impact on -- hopefully just about all of it here, I did want to explore a couple of aspects of the way this Sirius failure has come about and how it has been managed. The Minister has provided, upon questioning from Mr. Hawkins, some information to the effect that on a $10.7 million total exposure we will potentially see, and this is after perhaps a decade of recovery on the trademark fee, a net loss of $4 million on a total exposure of $10.7 million. Maybe my terminology is a little bit off there, but we lost about 40 percent of our shirt on this one, Mr. Chair.

One of the things that I recall about the way we managed this, when the original company and the loan was called and the government actually stepped in and took over the plant, was how long it took us to determine how we were going to go about looking for a potential new buyer, and then how long it took us to verify and make up our minds and go through the paperwork and even when it came clear that a certain party was not going to be the successful bidder, it took weeks it seemed -- and I think I'm right on that, Mr. Chairman -- just to sort of clear the paperwork up so we could get on with actually finding a new buyer.

My point, Mr. Chairman, is that I really wasn't impressed with the way we handled this in an expedient nature. It seemed to take us a long, long time to get through what would otherwise have been or should have been relatively straightforward, not easy, but a relatively straightforward business decision on how to move something through.

I guess there is an area there that I wanted to probe a bit, Mr. Chairman. How is it that it took us so long to kind of work our way out of this receivership and into a position where the new Sirius company lives on under the Arslanian banner? Why did it take us so long to get here? Thank you.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, I guess since we are going into a little bit of history here, maybe I should do some of my own. Becoming the Minister responsible for this area and being briefed on the files that we had and the guarantees we had in place, I made a decision to bring this forward to my FMB colleagues and recommended that we act on these. The Arslanian factory deal was reached with the existing shareholders there as they managed to redo their work and come back to us with a better business plan and a more secure position for ourselves as the GNWT, and we accepted that and that was able to move on fairly quickly.

This one that we are dealing with now unfortunately did not go that path and we had to go through the courts. Once we entered into the courts through an interim receiver process, that opens the door to a whole lot of other processes that have to be adhered to. One is timelines, appeal process, interventions, and that itself dragged out the process for a number of days.

If we were able to get the deal that we had initially worked on and thought was the best deal, then we could have closed the doors on this as our first estimations were, late November, early December. Unfortunately that did not happen and we have had that discussion and debate around why that wasn't able to be done. But we weren't able to close that deal and had to then proceed to the next level and that is when things...Again, we had to add on a number of months for the processes to put the plan together, get legal people involved and so on. Unfortunately that did drag it out again for a number of months. We are almost a year at this now. By the time the 30-day appeal period ends, as it is going forward, our estimate as we laid before you takes into conclusion June 20th, and this is the numbers that we provide.

As much as we would like it to be a straightforward process, what we kicked into gear from the government end was straightforward. We needed to stop what was happening and act on it. Once we entered into the legal realm of courts and receiverships, that took on almost a life of its own and we had to follow processes that were laid out within that system. Hence, we are here now. Thank you.