Whapmagoostui’s financial pain: Report harshly criticizes overspending

An internal report on Eeyou Istchee’s northernmost community is raising doubts about its approach to tackling a sizeable budget deficit. The Whapmagoostui audit draws a picture of a community that is redirecting Cree Nation Government funds to expensive capital projects that lack financial documentation.

Whapmagoostui Chief Stanley George, however, is critical of the report, saying it is not fair and accurate and that the CNG does not understand the unique and significant needs of his community.

The report is not the first of its kind. A March 2012 audit showed the community had a  $5.2 million deficit and a cumulative deficit of $8.3 million.

To get the community’s financial house in order, experts drew up a plan for the community to follow.

Despite following the plan at first, the band council went back to free-spending habits. This prompted Aboriginal Affairs and Northern Development Canada to threaten Whapmagoostui with third-party management, an expensive process whereby outside number crunchers manage a community’s budget.

To avoid that fate, the community agreed to another plan that would cut this year’s deficit.

Despite progress, the report indicates the community still had a cash shortfall of $3.8 million last summer.

“Presently, we are very concerned that the measures to be implemented have not been addressed and that a series of other issues have also arisen or have not been resolved,” wrote the report’s authors, Yvan Gravel and Edward Ng.

Recommendations

The report makes eight recommendations. These include addressing use of credit cards that were “recorded and reconciled irregularly,” and passing bylaws to guard against conflicts of interest and shoddy bookkeeping.

One of the main recommendations is for the community to stop spending.

“Major concern is the continuing approval of unbudgeted expenditures… which will not allow WFN to meet its current obligations,” says the report.

Bill Namagoose, GCC executive director, says the report shows where the “solutions” lie. “They were not following the budget,” he said simply.

According to the report, CNG money from both The New Relationship Agreement and the Paix des Braves Agreement awarded to Whapmagoostui was earmarked for specific capital works projects.

The problem was that the money was being redirected to fund other initiatives.

Namagoose says that the CNG has now taken over management of those specific funds, to ensure that they are spent on the projects they are allocated for. According to the report those include a pumping station, a new water reservoir and a solid waste project.

“We don’t manage the band. We just manage a few projects,” he emphasized in a telephone interview.

The report also calls on the Whapmagoostui to end relations with a Montreal company called Les Roches du Nord. The company carried out a number of services in the community, including managing and running a restaurant, landscaping and renovating an old radio station.

The report says that over $1 million in Paix des Braves and Cree Nation Trust funds went to the company. Moreover, the report’s authors state that Whapmagoostui could not provide them with contracts for the work, and that band council did not approve the work.

“It is imperative that all business ties with les Roches du Nord be severed immediately,” said the report.

Chief George’s Perspective

Chief Stanley George, elected in 2009, said his administration has worked closely with outside financial experts to clean up Whapmagoostui’s finances.

George called it a challenging process, and he maintains that the report is inaccurate.

The band treasurer, he says, resigned prior to the audit. Neither the interim treasurer nor the director general were available to provide important information and documentation to the authors of the report.

Outstanding debt was already a major issue when George came to office. The windfall from the 2002 Paix des Braves had a lasting impact on the community’s spending, he noted.

“I think in the past people thought the money would never stop after the Paix des Braves funding. We got a big substantial amount of money for 50 years. But two years after that we started experiencing cash flow shortages,” said George.

George says that the community has halted its relationship with Les Roches du Nord and that lessons are being learned from the report. The community has adopted the recommended financial administration bylaw. And he wants to chart a new, positive future for the community.

“I will not say this person is guilty or who is at fault. As a traditional person, I hold that sacred. Whatever happened, it happened. We learned our mistakes. We’ve acted in the best interest of the community,” said George.

Growing tension

According to the Chief, the Grand Council and the report’s authors don’t fully appreciate Whapmagoostui’s unique challenges.

His community is facing a major housing crisis. In fact, he lives in his grandmother’s home with two of his children because of a lack of housing.

Over $1.7 million went towards the construction of rent-to-own housing and maintenance of 17 other housing units, which had to be winterized and treated for mould.

There are also issues with alcoholism. Moreover, because of its remote location, essential goods – like groceries – are extremely expensive.

The money he receives for community housing is insufficient, George complained. He would like Cree officials to spend more time in his community to understand its needs.

“I’m walking around with restrictions. I’m like them to come visit. Look at our reality. Being the most northern community, we always get the short end of the stick.”