Barriere Lake Algonquins sue federal government over management secrecy

The Conservative government’s First Nations Transparency Act is causing trouble and controversy for many First Nations governments. Many First Nations refuse to submit to the authority of the act. But the case of the Algonquins of Barriere Lake is different: they can’t comply, they say, and it’s because the eight-year-long third-party management of their community has not provided them access to their financial information.

On January 30, the Algonquins of Barriere Lake filed a $30-million lawsuit against the Attorney General of Canada as well as the two companies – Hartel Financial Management and BDO Canada – that have had control over their finances. In the suit, they accuse the federal government of breach of fiduciary duty, breach of contract, interference with economic relations and negligent misrepresentation.

“We’ve been under third-party management since 2006,” said Tony Wawatie, the band’s interim executive director general, “so we don’t know what our financial snapshot is. We requested documents from the Department of Aboriginal Affairs and they sent documents that are not even pertinent to what we were asking for. It seems like this community has been taken advantage of and we want to put systems in place to take back our administration. One of the things we wanted to know was how much do we owe, to come up with some kind of a plan.”

However, Wawatie said, under third-party management, the band has been kept in the dark about details of how its money has been spent. And to make matters worse, so long as they don’t have that information, they can’t give the government the information it is demanding under the Transparency Act.

Wawatie stressed that the band is not resisting the legislation, as some bands have done.

“We’re not saying no to complying with the new legislation,” he said. “The reason why we couldn’t comply was that we didn’t have all the financial information to do the audit. Because if we don’t see what’s going on in the transactions, how do you want this council to sign off on the consolidated audit? We just want to make sure we have all the numbers in place to do that.”

A spokesperson for Aboriginal Affairs Minister Bernard Valcourt claimed the minister and his office believed that the band had all the information it needs to comply with the act. Wawatie scoffed at that idea.

“That’s not true,” he said. “As a matter of fact, we haven’t got any documents from Human Resources and Skills Development Canada (HRSDC). I’m not sure what [Valcourt is] talking about. The $250,000 they administer can have an impact on the audit – and that’s how much money is being administered by HRSDC. We don’t know what the transactions are, what we’re paying. I don’t want 50% or 80% of the information to do an audit – I want all of it. We’re not going to sign blank cheques here and there.”

In their press release announcing the lawsuit, the band states that it has been governed by a series of managers who have refused to comply with requests for basic information while bouncing cheques to the band’s suppliers and tarnishing previously existing economic relations. (In particular, they cite Hartel Financial Management for bouncing 15 cheques in 2013 – after which Aboriginal Affairs renewed Hartel’s contract to manage the community’s finances.)

Third-party managers, the press release states, have “proven themselves completely unconcerned with the interests, well-being and future of our community. [… They] are neither accountable to our members nor motivated to bring us out of default, because our continued default status ensures that their contracts will be renewed by Canada.”

With so many First Nations across Canada having third-party management forced upon them, the case is sure to draw plenty of attention, particularly for its willingness to call into question the usefulness of the managers themselves, and their own potential conflicts of interest in running the First Nations finances.

More than $6 million of band funds have been spent to finance the third-party managers, who they note are located hundreds or thousands of kilometres away from their community. That money, they argue, “could have been used by Barriere Lake to hire its own professional accounting, finance and administrative staff, and to improve the infrastructure and services available to our members.” Instead, the managers “harmed, rather than helped, our members, and interfered with our ability to improve the administrative, financial and governance services we provide to our community.”

“I don’t want to speak too much about the court case,” Wawatie said, “but I think it will take a while, because the government is known to fight back, and they have the money to do it.”

While the court case is going on, the band has had funding cut by Aboriginal Affairs for “non-essential services” in order to punish them for not complying with the Transparency Act. Wawatie said that they’ve already lost $7,000 in band support, and $10,000 in economic development funds, and had been informed that morning that Aboriginal Affairs was cutting funds for travel claims.

“They’re starting to close the tap now,” he said.

Still, the Algonquins of Barriere Lake say they’re ready for the fight, because they believe that they have the moral authority in the situation. They have been consulting with Carleton University’s School of Policy and Administration in order to learn how to strengthen their government and improve the services they offer to band members.

“For far too long we’ve been under third-party management,” Wawatie said, “and I think the agreements are there to try to help us out to make us self-sufficient and autonomous. That’s what we want to do.”