The auditor general has at last delivered a stinging rebuke to the Harper government, saying Conservatives kept Parliament in the dark about a $50-million G8 fund that sprayed money on dubious projects in a cabinet minister's riding.

The final report on the G8 legacy infrastructure fund concludes the government "did not clearly or transparently" identify how the money was going to be spent when it sought parliamentary approval for the funding.

Moreover, the report criticizes the unprecedented lack of documentation to explain how and why 32 infrastructure projects in Ontario's Parry Sound-Muskoka region were selected to receive the government largesse.

It concludes that public servants had no input into the selection process; that projects were approved by John Baird, then infrastructure minister, strictly on the advice of Treasury Board President Tony Clement, whose cottage country riding hosted the G8 leaders' summit.

"It is very unusual and troubling," interim auditor general John Wiersema said Thursday after tabling the report, which was prepared under his predecessor Sheila Fraser.

"There is no paper trail behind the selection of the 32 projects. I personally in my career in auditing have not encountered a situation like that where there is absolutely no paper trail behind this."

Responding on behalf of the government, Baird accepted the auditor general's criticism of what he labelled "administrative deficiencies." But he insisted there was no attempt to deliberately mislead Parliament.

However, opposition MPs said the report reveals the government created a secret, political "slush fund" that Clement dispensed around his riding as he saw fit — on gazebos, parks and public toilets that were often hours away from the summit site in Hunstville.

"We've got a bunch of gazebos in the middle of nowhere," groused New Democrat MP Charlie Angus. "This is absolutely appalling misuse of public funds."

Opposition MPs also said the report destroys Clement's credibility as he sets out on his new mission to slash $4 billion worth of annual "fat" from government spending.

"To turn around and say now 'Having been Captain Waste, now I'm Captain Clean-up,' I don't buy it," said Liberal Leader Bob Rae.

"I think it's preposterous. I don't think he has any credibility in telling Canadians how he's going to save money."

In a separate chapter of the report, the auditor general says spending on operations and security for both the G8 and subsequent G20 meetings in Ontario was presented piecemeal to Parliament instead of in a package, leaving MPs poorly informed about total costs.

But in one bright spot, the report says it appears the initially budgeted $1.1 billion for the summits will actually come in around $664 million.

That's because poor co-ordination forced departments to over-budget and set up contingency funds that were not needed.

The final report does not contain the inflammatory language used in a January draft, which baldly asserted the government had "misinformed" Parliament about the G8 legacy fund and suggested the opaque process for approving the funding might actually have been illegal.

That draft created a sensation in April when it was leaked to The Canadian Press in the midst of the federal election campaign, just hours before the crucial English-language leaders' debate. Prime Minister Stephen Harper's Conservatives promptly leaked a subsequent February draft, in which references to misinformation and illegality had been dropped.

Fraser, who has since retired as auditor general, implored voters to wait for the final report before drawing conclusions. She refused to release the report during the campaign, insisting it could only be tabled when Parliament was sitting.

Although the language has been toned down, the gist of the criticism of the legacy fund remains the same in the final report as in the initial draft.

Rae said the more cautious wording makes no difference.

"I don't think it matters a fig, frankly. The fact of the matter is Parliament was misinformed. It was a classic bait and switch."

The report details how, in November 2009, the government tabled supplementary estimates in which it asked Parliament to approve $83 million for a border infrastructure fund aimed at reducing congestion at border crossings.

Parliament was not told that $50 million of the fund was to be devoted to infrastructure projects hundreds of kilometres from the Canada-U.S. border — in Clement's riding.

"In our view, by presenting the request for funding in the supplementary estimates in this way, the government was not being transparent about its purpose," the report says. "Parliament was not provided with a clear explanation of how those funds were to be spent."

Wiersema said the word "misinformed" was excised in the final version because auditors saw no evidence to suggest the government was deliberately trying to mislead Parliament. Rather, he said, the misrepresentation in the estimates appeared to have been done "for matters of expediency."

"Having said all that, going to Parliament requesting money for one thing and using it for something else is a serious matter which we think deserves parliamentary attention."

But Prime Minister Stephen Harper effectively shrugged. Indeed, he candidly told the Commons the border fund has been used routinely for other purposes.

"If the leader of the Liberal party had looked at the border fund he would realize it's frequently used for projects that are not in border communities," Harper said, raising hoots of derision from opposition benches.

The draft report had pointed out that, under the Appropriations Act, funding is supposed to be allocated based on specific items presented in the spending estimates. It added that hiding the legacy monies within the border fund "raises broader legal questions" Parliament may wish to examine.

Those references to possible illegality were dropped in the final version.

Wiersema initially said he's "not aware of any specific law that was broken." However, he later conceded the matter is not clear and suggested the auditor general's office decided it's up to politicians to determine whether "anything illegal took place."

"I think the legal profession could have an interesting, long debate about the wording of the Appropriations Act and whether or not this was inside or outside of the Appropriations Act. We chose not to go there."

Despite their outrage, neither the Liberals nor New Democrats were immediately prepared to ask for a police investigation into possible illegality.

Deputy NDP leader Thomas Mulcair said "there's no doubt whatsoever that there are questions of legality involved." Nevertheless, he said Parliament is "very capable" of dealing with the matter.

The legacy fund was supposed to help Clement's riding prepare for hosting the G8 leaders' summit in June 2010.

"Projects were supposed to support the safe, secure and successful hosting of the summit by improving travel safety, enhancing the image of the region and improving the security of residents and visitors during the event," the auditor general's report notes.

Yet auditors were unable to find any documentation about how projects were selected or even why the government settled on $50 million for Parry Sound-Muskoka when cities that have hosted previous summits received no more than $5 million.

A total of 242 projects were identified by local communities and stakeholders as potential recipients of funding. Although Infrastructure Canada managed the legacy fund, it did not manage the application intake or identification of priorities for funding and, thus, could provide no documentation about how projects were reviewed or chosen.

And while the summit management office at Foreign Affairs was supposed to ensure the needs of the summit were supported, auditors found the office was not involved in reviewing or selecting the projects and, therefore, had no documentation either.

Clement later told a news conference that the list of 242 originally proposed projects was compiled by six mayors in his riding. He asked them to whittle it down to their top priorities, which they did, producing the 32 which eventually received funding.

"So there's no mystery here," Clement said.

Baird, now foreign affairs minister, took sole responsibility for approving the projects. He said he also signed off on the way the funds were not directly disclosed in the spending estimates. With only a year to complete projects before the summit, he said haste was of the essence so he took the advice of bureaucrats to lump G8 legacy monies under the existing border fund.

Baird pointed out that the government publicly announced the $50 million G8 legacy fund and disclosed all the approved projects on Infrastructure Canada's website, complete with photos.

"Obviously, we had no motive to keep this secret or quiet. We were announcing it publicly," he said.

The audit did not attempt to evaluate the 32 projects that received funding. But opposition parties have long had a field day enumerating questionable projects that appear to have little, if anything, to do with hosting the summit.

Among the most controversial:

— $274,000 on public toilets 20 kilometres from the summit site in Huntsville.

— $100,000 on a gazebo an hour's drive away.

— $1.1 million for sidewalk and tree upgrades 100 kilometres away.

— $194,000 for a park 100 kilometres away.

— $745,000 on downtown improvements for three towns nearly 70 kilometres away.

In MY view...Its a disgrace to the Canadians people Intelligence