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A $100-million program to compensate Canada's airlines for losses related to the Sept. 11 attacks was so rushed that Transport Canada started writing cheques without having final rules in place, says a new audit.
Large payments went out quickly to the big carriers with the rules still in flux and with inadequate financial scrutiny, resulting in a $10.5-million overpayment to Air Canada.
And no money went to hundreds of smaller carriers for more than two months while bureaucrats tried to come up with a final plan.
The audit report, commissioned by Transport Canada from BDO Dunwoody and Associates Ltd. of Nepean, Ont., was obtained under the Access to Information Act.
The first cheque, for $7.5 million, went to struggling Canada 3000 on Oct. 17 - about three weeks before the company went bankrupt.
Air Canada got a cheque for $71.3 million on Oct. 30; Air Transat for $4.2 million, also on Oct. 30; and WestJet for $1 million on Nov. 19.
The audit found that the rules were changed between the Canada 3000 payment and the payments to the other large carriers. Rules for 317 smaller carriers were not drawn up until Dec. 18, leaving them waiting two months and longer for a bailout.
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