The Economic Development Department provided $50 million in loan guarantees to Atcon in June 2009 on cabinet approval despite internal recommendations to reject the request for assistance, Kim MacPherson said.
There were red flags including Atcon's marginal profitability, the company's questionable ability to repay debt and its dismal record of meeting its payment obligations, yet the government of then-premier Shawn Graham went ahead in approving the funds, MacPherson said.
"Based on our review of these facts, it is our opinion cabinet exercised a very troubling disregard for taxpayers' money," she said in a stinging report released Tuesday.
"A similar situation can happen again as long as elected officials can influence the decision to give financial assistance."
A number of measures intended to mitigate the province's risk were applied to the $50 million in loan guarantees, but they were later removed by Graham's cabinet, MacPherson said.
Among those, the government relinquished its priority position on Atcon's assets in favour of Scotiabank. Atcon asked the Economic Development Department to give up its position so that Scotiabank would extend more credit to the company. Departmental staff rejected the request but the cabinet eventually approved it.
New Brunswick's liability lies beyond the loan guarantees that were given in 2009. Since 1993, the province has loaned and granted money, bringing its total liability to $69.6 million.
MacPherson made 19 recommendations. Finance Minister Roger Melanson said the government will look at them.
The Miramichi-based Atcon group of companies filed for creditor protection in 2010, a year after receiving the loan guarantees.
In February 2013, the conflict of interest commissioner concluded that Graham was in a conflict at the time the loan guarantees were provided because his father was a director of Vanerply, a Swedish subsidiary of Atcon. Graham was fined $3,500.
The commissioner also said cabinet ministers ignored the advice of government staff who advised against offering support to Atcon.
MacPherson said she saw nothing to show that decisions by the government on the Atcon file were reasonable.
Six cabinet ministers in Premier Brian Gallant's government also sat at the cabinet table under Graham's government. They all declined comment Tuesday.
Melanson stressed he was not elected at the time the Atcon decisions were made. He would not say when asked by reporters whether he thought those cabinet ministers owed New Brunswickers an apology.
"It happened two governments ago, and politically, New Brunswickers have spoken loudly," he said, referring to the Liberal defeat in September 2010.
MacPherson's recommendations include one that would require the government to annually track and report the 10-year history of actual performance of assistance provided to industry.
She said almost $1 billion in government funds to the private sector has been approved by the Economic Development Department in the last decade, but there's no clear picture whether it has been effective.
The Opposition Tories called on the government to follow through on all of the recommendations.