Chiefs, business leaders challenge INAC

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When Indian Affairs Minister Robert Nault decided to change his instructions to third party managers in late November, business owners immediately discovered their bills weren't getting paid.

On Jan. 25, about 40 people packed a conference room on the second floor of the downtown Winnipeg Assembly of Manitoba Chiefs headquarters to see what they can do about it. Manitoba Vice-chief Ken Young chaired the meeting. Most of the rest of the people at the Friday morning meeting were non-Native lawyers, bankers, business owners and consultants. All seemed unhappy with, or concerned about, Indian and Northern Affairs Canada's (INAC) new third party intervention policy.

Previously, third party managers arranged a band's affairs so that all creditors were in line for repayment. More recently, the policy was changed so that the third party manager is limited to only paying for essential services. Under the third party management system, the government appointed trustee has all the power and complete control over the band's assets.

Native leaders say the policy puts them into what amounts to bankruptcy and then makes it impossible to ever get out.

"The third party management portion of the policy really cripples the ability of the First Nations to meet their obligation to the business community," Vice-chief Young said. "We need to fix this policy so that appropriate arrangements can be made to have the debts that are out there attended to in a responsible way. The third party management aspect of this policy prohibits that from taking place because it states that the manager who is appointed by government has the final say in how the monies that are there are to be used and who gets paid. There's no room there for the business community to be a factor and that's wrong. While the government says that the responsibilities of the debt are the First Nation's, there's no money to service the debt and there's nothing that First Nations can do."

Young asked for help in lobbying the minister to change the policy.

"We need your help," he said. "We need the business community to help in terms of a lobby effort. Write your MPs, write to the minister of Indian Affairs, explain to the government that this policy's not working, it's having a negative impact on the partnership concept that you continually talk about through the media."

The intervention policy actually has three phases. When a band experiences financial difficulties, a financial management plan is worked out by government officials and the First Nation. Should problems persist or worsen, a bands goes into co-management, dealing with a third party that is appointed jointly by the First Nation and the government. If the band's debt exceeds eight per cent of its budget, the government appoints a third party manager who has total control.

"It's at that time the business community and the First Nation become strangers in terms of getting the debt attended to by the First Nation," Young said.

The minister, as he did with the Pikangikum First Nation last year, can also arbitrarily order a First Nation into third party management.

Many business people were critical of the way the policy is implemented. Don Pearson, a Winnipeg consultant who is owed about $250,000 by Manitoba First Nations, rapped the government for its unwillingness to even listen to him and others who are owed money, saying there was a "closed door policy" in effect.

"All the people that I work with, they call the co-manager and they say, 'No, we can't talk about your bill.' The same thing with the department when you call them," he said.

Graham Steiner, the president of the Manitoba Chamber of Commerce, said he's willing to contact other chambers around the country to inform them of this situation. He asked Young how many First Nations were caught up in the system.

That question was a point of discussion between Canadian Alliance Indian Affairs critic Reed Elley and the mnister at a standing commttee on Aboriginal affairs meeting on Nov. 28.

Elley consulted the department's own performance report that stated 16 per cent of bands were in some form of remedial management. He asked if that meant that 16 per cent of the more than 600 bands- about 96 bands-were in third party management. The minister said only 25 bands were in third party management with 11 in Manitoba. Nault added that the 16 per cent figure probably included bands in the other two stages of the intervention policy.

The minister was then asked about the government's obligation to those who are owed money by First Nations in third party management.

"The government of Canada and the department of Indian Affairs have no legal obligation to third parties. We hire a third party manager with the intent of assuring ourselves that our legal obligations to First Nations citizens are met, that is, the delivery of core services. That's their obligation and that's their directive when they are hired as a third party manager," the minister said. " You can imagine, Mr. Chairman, what it would be like if this minister and this government were responsible for every interaction between the private sector and the band, or some entity within the band, with over 600 First Nations across the country. The department would then virtually have to run the whole community.

"So we have no legal obligation, and every single business enterprise across the country should be aware of that if they're not. We do suggest to the third party manager that it would be helpful to work with the business community in the sense of trying to assure them that after the core services and programs are delivered through the process, there could be arrangements to pay back. But there's no legal obligation to do so. I think that's important to know, because on many occasions, I have had letters written to me by members of Parliament on behalf of a business person who believes it's the obligation of the overnment of Canada to deal witha bill that has not been paid, when in fact it's not our obligation, because we didn't enter into that agreement; the band council did. They can take the legal route."

Elley told Windspeaker he believes the policy threatens future economic growth for First Nations.

"We've always been very concerned that the government sort of just abdicates its responsibility to businesses out there who are trying to work cooperatively with First Nations and who run into financial problems," he said. "They simply say, 'Look, we just aren't liable.' And so they put it into third party management and, you know, what they're doing is quite legal but it's not morally right. We've had probably over 40 complaints from business people dealing with this kind of thing. If you want legitimate businesses to partner with First Nations to either provide some kind of economic renewal at the reserve level or if you want them to partner with them to build arenas and schools and stuff, you've got to have some kind of certainty there."

No one yet has done the research on how much money is owed by bands managed under the intervention policy. Estimates are all in the millions of dollars.

"I would imagine that it's quite substantial and it's debilitating not only for our people but for the business community," said Young.

Former Manitoba Liberal leader Paul Edwards, a lawyer, also attended the meeting. He suggested that a delegation of business and First Nation leaders should meet personally with senior government officials. He said he was worried that many First Nations would soon find that nobody would do business with them.

"They just can't function on a cash basis, which is the natural repercussion of this policy," he said.

Young was first approached on this issue by Birdtail Sioux First Nation Chief Murray Clearsky. Clearsky also approached Alan Isfeld, a local consultant who has become well known in Manitoba for championing the cause of Wing Constuction, an Ontario company that claims it i owed $3 million for an aborted construction project. Don Wing, the proprietor, is now suing members of the former Sagkeeng council over that matter. Isfeld and Clearsky organized the meeting with the written support of the vice-chief.

In an interview, both men told Windspeaker they see the change in policy as an indication that the minister is exercising all of the power and authority while taking none of the responsibility.

"The minister is saying he expects First Nations to be accountable. On the other hand, he's saying when I, as the minister of Indian Affairs, take over control of a First Nation, I'll choose what I'll be accountable for," Isfeld said. "This is driving a wedge between First Nations and private sector business. It will become a cash only process for doing business. Is that what the minister wants?"

Clearsky said the problem only began to surface in early December and many First Nations and businesses aren't yet aware of the policy change.

"A lot of First Nation communities don't realize what's happening. Not only the leadership but the membership," he said.

Both men believe the Liberal government is jealously protecting its relationship with the business sector and is making sure that First Nations don't push their way into that picture. Clearsky said the Indian Affairs bureaucracy doesn't want healthy First Nations businesses that would build thriving economies that would have no need of the department. He said the strategy of creating welfare dependant societies with no economic activity is one that serves the department's need to exercise control over his people very well.

"The only place the minister's talking about economic development for First Nations is where there are unexploited resources. Economic development for whom?" Isfeld asked.

Bill Wilson, an executive member of the British Columbia First Nations Summit agreed. He said the situation is becoming a problem in his provinc