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Prince Edward Island is scrapping a controversial business immigration program which prompted federal investigations alleging hundreds of applicants never settled on the Island.

The provincial government said Wednesday it will no longer accept applications from immigrants looking to set up a business on the Island in the entrepreneur stream of the Provincial Nominee Program.

The immigration program has faced criticism for granting permanent residency status – a coveted step towards full citizenship – before businesses were set up and people actually moved to P.E.I.

Under the program, the applicants provide the Island government with a $200,000 refundable deposit, and commit to invest $150,000 and manage a firm.

READ MORE: Academics want to raise Canada’s ‘failed’ investor immigrant program from the dead

A spokesman for the Office of Immigration says in 2016-17 over half of all the 269 applicants who had “completed their agreements” forfeited their deposit and never opened a business, raising $18 million for the small province.

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Progressive Conservative Leader James Aylward said Wednesday the program bred public distrust and should have been cancelled years ago.

“It never passed the sniff test,” he said in an interview.

“Our retention rate was dismal … The government raked tens of millions of dollars from defaulted deposits.” Tweet This

The province had said it was conducting a review into the program, shortly after a series of investigations by the Canada Border Services Agency became public.

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The province had said it was conducting a review into the program, shortly after a series of investigations by the Canada Border Services Agency became public.

The Canadian Press recently reported on a search warrant application by the agency that alleged hundreds of people gained permanent residency in Canada by using local addresses where they didn’t live, using the PNP entrepreneur stream.

An investigator alleged 462 applicants to the provincial nominee program used Charlottetown homes belonging to two Chinese immigrants over the past four years as “addresses of convenience.”

The investigator also said she suspected the immigrants didn’t come to the Island and settle, contrary to the requirements of the provincial program.

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Those allegations, which have not been proven in court, came two months after two Charlottetown hoteliers were charged with aiding in immigration fraud, with the CBSA alleging 566 immigrants used the addresses of the siblings’ hotel and home.

The siblings have pleaded not guilty to immigration fraud charges, and their lawyer, Lee Cohen, has said there will be discussion with prosecutors about the sworn statements provided by the two accused.

Cohen says he’s suggested “the possibility that the statements were not voluntarily given” in the case.

Chris Palmer, the province’s minister of Economic Development, said in an interview that he wasn’t forced by the federal government to shut down the program, despite the high-profile investigations.

“The feds didn’t intervene and tell us to do this, no,” he said.

Rather, he said it was due to his department’s disappointment with its results in retaining immigrants on the Island.

“We weren’t satisfied with it as our rates of retention weren’t as high as we wanted them to be,” he said.

However, Richard Kurland, an immigration lawyer based in Vancouver, said he sees a relationship between Ottawa’s probes and the shutdown of the program.

“Trials involving the P.E.I. program start soon, so no surprise to see the P.E.I. government shutting down the program before all is revealed,” he wrote in an email.

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Kurland has long argued the Island’s system should mirror British Columbia’s program, which approves a business project first, makes the person spend two years on a work permit to ensure business success, and then requires the applicant to live near the business at least nine months a year.

“Only after that is done and the business is successful will the province hand over a ‘nomination certificate’ that lets the person apply for a permanent resident visa,” he wrote.

“P.E.I. had it backwards, handing over the ‘nomination certificate’ first. That’s not the way to go and the … design flaw gave rise to a lot of problems.”

“Keep the candy until the person lives up to their promises.”

The province is noting that the entrepreneur stream is only a small part of the total number of immigrants it nominates.

It will continue to have a program where it nominates immigrants for work permits, where they will only be granted permanent residency if they fulfil their commitments to set up a business.

It will also continue to nominate immigrants who fill the province’s labour needs.

The number of nominations accepted under the nominee stream currently totals about 150 people, which is about 15 per cent of the roughly 1,070 provincially sponsored immigrants expected to be nominated this year.

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