Barriere Lake sues Aboriginal Affairs and Third Party Managers

OTTAWA – On January 30, 2015, the Algonquins of Barriere Lake commenced a legal proceeding against Canada and past and present third party managers for breach of fiduciary duty, interference with economic relations, and negligence. Their claim is for $30 million in damages for lost monies, undermined autonomy and self-governance, and harm to their reputation.

Threatened with a loss of services for their inability to comply with the First Nations Financial Transparency Act, the community is fighting back in court, and in doing so, dragging the whole corrupt federal funding system onto the public stage.

Under the Transparency Act, bands must now post consolidated audited financial statements online, including the First Nation’s assets, liabilities, equity, income, expenses and cash flows. Barriere Lake state that they cannot comply with the Act since they have had no control over band spending since 2006. They refuse to be liable for financial decisions taken on their behalf by external accountants.

The band is under Third Party Management (TPM), a remedial policy that gives the Minister of Aboriginal Affairs the power to appoint private accounting firms to takeover the financial management of bands running deficits. Third party managers are answerable to Aboriginal Affairs, but forcibly paid by the bands.

Since Barriere Lake was put under TPM they have never seen a complete account of their finances. Since 2012, Barriere Lake has been requesting disclosure on funding agreements between Aboriginal Affairs and Barriere Lake, as well as annual audits, program budgets, and TPM agreements with Aboriginal Affairs. Aboriginal Affairs has forestalled the release of this fiscal data by contriving extensive delays and bombarding the band with boxes of irrelevant documents.

The Minister of Aboriginal Affairs imposed TPM due to an $83,000 deficit. Calculating that the average salary accountants are paid is $200,000 a year, that would make the cumulative TPM intake almost 22 times the amount of the initial deficit they were hired to resolve.

As the band states, “If we remain in ‘default,’ it is because of chronic underfunding by Canada and the failure of third party managers to competently and diligently manage our finances, for the benefit of the community and its members.”

Barriere Lake Interim Director General Tony Wawatie links the lack of accountability of third party managers with the hypocrisy of the Transparency Act: “The Department has been trying to get this Council to sign off on these consolidated audits and meanwhile there was never any clear line of authority or agreement between TPM and Barriere Lake.”

Barriere Lake legally challenged TPM in 2008, launching a judicial review of the Minister’s decision to impose the policy on the community. On behalf of the Elders Council at Barriere Lake, Harry Wawatie alleged that the band’s deficit arose from the Minister’s failure to fulfill his obligations under three separate agreements entered with the First Nation, including the ground-breaking 1991 Trilateral Agreement, a resource co-management agreement that would have given the community a decisive say in the management of 17,000 square kilometers of their traditional territory. The case was dropped when the government at Barriere Lake changed that year.

Now the Algonquins of Barriere Lake are going back to court to challenge Aboriginal Affairs and the TPMs ongoing misdirection and holding of funds owing to Barriere Lake. Their case will also raise fundamental questions about the politics of federal funding of First Nations in Canada.

For example, in her 2003 report, the Attorney General of Canada found “no results-based management and accountability framework in place” for TPM. As the case of Barriere Lake shows, there has been little improvement to conditions since that time.

The stakes here are high. Aboriginal Affairs can use debt to control opposition from bands like Barriere Lake, who have been opposing the federal land claims policy for decades. Certainly, the Federal Court found that the Minister’s imposition of TPM on Attawapiskat in 2012, following the national attention Chief Spence drew to her community’s housing crisis, was leveled without consideration for “more reasonable, more responsive or less invasive remedies available.”

So while the Crown is taking court action against First Nation bands that have publicly declared their refusal to submit to the Transparency Act, Barriere Lake will be taking the Crown to court for refusing to comply with basic financial disclosure regulations by way of third party managers.

The hypocrisy of the Transparency Act only continues to darken the stain on Canada’s record of fiscal relations with First Nations. It exposes a two-tiered accounting system where Aboriginal Affairs is exempt from honest reporting while expanding their control over First Nations by introducing new levels of financial oversight.

This revealing moment of Aboriginal Affairs’ fiscal warfare against First Nations might be the only public benefit of the legislation.

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