05/26/2014 07:13 EDT | Updated 07/26/2014 05:59 EDT

Enterprise Cape Breton Corp. CEO improperly hired people with Tory ties: report

HALIFAX - The federal public sector integrity commissioner says the suspended CEO of Enterprise Cape Breton Corp. breached the Crown agency's code of conduct by hiring four people with ties to the Conservative party.

Mario Dion's report concludes that John Lynn hired those four people in 2009-10 without showing that their appointments were based on merit.

"Mr. Lynn seriously breached ECBC's code of conduct ... when he appointed four individuals with political ties to ECBC executive positions without demonstrating that the appointments were merit based," the report says.

"These actions could reasonably be expected to create a perception of patronage within the federal public sector."

Lynn could not immediately be reached for comment. The federal government declined to respond to specific questions about Dion's report, noting that it had not been tabled in Parliament.

A copy of Dion's report was provided to The Canadian Press by the federal Liberals, who filed a complaint with Dion alleging that Lynn did not follow proper procedures when he made the hires.

The report says without a comprehensive explanation from Lynn, the commissioner determined there was an element of deliberateness to his actions.

Dion says in the report that while Lynn's appointment decisions were inconsistent with good governance standards, they did not amount to gross mismanagement nor did they affect the ability of Enterprise Cape Breton to carry out its mandate to promote development in that region.

Lynn was named CEO of Enterprise Cape Breton Corp. in May 2008, and had previously been a long-serving executive with Sobeys.

Dion is scheduled to table the report in Parliament and hold a news conference about it on Tuesday.

A spokesperson for Rob Moore, the minister of state for Enterprise Cape Breton Corp., declined to answer questions specifically about Dion's report other than to say it had not been tabled yet.

"However, I can assure you that the minister's expectation is that ECBC conduct its business with integrity, accountability, and respect for Canadian taxpayers," Kelsie Corey said in an email.

Rodger Cuzner, the Liberal MP for Cape Breton-Canso, said in a news release that the party wants the appointments in question to be revoked.

Enterprise Cape Breton Corp. is about to be rolled into the Atlantic Canada Opportunities Agency. The federal government has said all of Enterprise Cape Breton's employees in Cape Breton will keep their jobs at the agency's Sydney office.