Ottawa opposition critics are attacking Canadian Prime Minister Jean Chretien for his possible role in a grant to a plastics company in his Shawinigan, Quebec, electoral district.
Placeteco Inc. received a C$1.2 million (US$860,000) grant from Canada's federal government in 1998.
The National Post of Toronto reported government correspondence indicated Placeteco should not have qualified for the grant because it did not fit grant guidelines.
Among other irregularities, the company was near bankruptcy and was purchased without a new grant application being filed.
Placeteco of Grand-Mere, Quebec, does vacuum forming and reaction injection molding, according to a Quebec source. It now employs about 62. Placeteco officials could not be reached for comment.
The National Post reported Placeteco was in bankruptcy proceedings when it was bought by Claude Gauthier, a businessman in Shawinigan and friend of Chretien who donated money to Chretien's political campaign.
Critics from the New Democratic Party and the Reform Party accused Chretien of political meddling in Placeteco's grant. But Chretien spokesmen said the grant was to preserve jobs in the depressed Shawinigan region.
Canada's auditor-general will launch an investigation this fall into the whole federal jobs program, under which Placeteco's grant was issued. Officials in the auditor-general's office said the review has been planned for some time, according to the Toronto Star.
A report in that newspaper said the program has been dogged by other controversies in the past year.