Mario Dion, commissioner of the Office of Public Sector Integrity, wrote that his office launched the inquiry into four hirings by John Lynn, chief executive of Enterprise Cape Breton Corp., following a complaint by Liberal MP Gerry Byrne.
A spokeswoman with Dion's office declined to comment on the letter, which was provided to The Canadian Press by the Liberal party along with a copy of Byrne's original Dec. 13, 2012 complaint.
Lynn did not respond to an email requesting comment.
In his complaint, Byrne alleged Lynn did not follow proper procedures when he hired three people with "strong ties" to the Tories for senior jobs at the agency and that the positions were never posted.
Byrne, the MP for Humber-St. Barbe-Baie Verte in Newfoundland, said the Crown agency's hiring "must be merit-based and protective of a tradition of non-partisanship."
Dion wrote in his response letter dated June 10 that an investigation into Lynn's hiring practices is proceeding because there are "reasonable grounds to believe that a wrongdoing was committed."
The letter also said Dion's office will look into an alleged mismanagement of a marina project in Cape Breton that was funded by the agency.
The letter doesn't make clear which marina Dion is referring to, and the commissioner's office declined to comment on the details.
However, Enterprise Cape Breton Corp., has invested in a year-round recreation complex at Ben Eoin, near Sydney, N.S., which includes the Ben Eoin Marina. Byrne said this is the project he complained about in a telephone conversation with the commissioner's office.
Dion's letter said he is examining whether Lynn committed "a gross mismanagement in the public sector" under provisions of the Public Servants Disclosure Protection Act.
The legislation was created to give whistleblowers in the public sector and the general public a method to disclose serious wrongdoing, according to the Treasury Board's website.
Edith Lachapelle, a spokeswoman for the commission, said if there is a finding of wrongdoing it will be made public and recommendations will be tabled in Parliament.
She said the commissioner can make a finding of wrongdoing if a federal act is violated by a public sector manager.
Lynn was named CEO of Enterprise Cape Breton Corp. in May 2008, and had previously been a long-serving executive with Sobeys.
Byrne said Defence Minister Peter MacKay, who was the minister responsible for the agency between February 2006 and October 2008, passed over senior civil servants when Lynn was hired.
In his complaint, Byrne said Lynn had no record of public service and described him as "a longtime associate" of MacKay's.
Jay Paxton, a spokesman for MacKay, said the minister was unavailable for comment. Paxton said in an email that the head of the agency "is chosen by the governor-in-council, not by any individual minister."
Donald Landry, a spokesman for Enterprise Cape Breton Corp., said Lynn is on leave from his position for an undisclosed period of time.
He said he couldn't comment on the reasons for the leave, but added that Lynn remains employed at the agency.
Landry said the inquiry doesn't involve any other agency employees.
"It (the inquiry) is an issue between the public sector integrity officer and Mr. Lynn," he said.
Byrne said in an interview that he launched the complaint because he wants an independent inquiry into how the Crown corporation is choosing its top employees.
He said he asked for the integrity commissioner's involvement because Enterprise Cape Breton Corp., doesn't fall under the jurisdiction of the Public Service Commission, which normally investigates hiring complaints in federal agencies.
"If the concerns aren't founded, it will shore up confidence in the organization," he said.
"If these concerns are determined to be founded then corrective action has to be taken."