Partners battle over school construction

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The Sagkeeng band council, already in receivership, is now pondering how it will deal with a $3 million claim against it by Don Wing.

Wing, the non-Native managing partner of Wing Construction Ltd. of Thunder Bay, Ont., entered into a partnership agreement with the trustees of the Manitoba First Nation's Sagkeeng Education Authority Business Trust in 1997. The goal of the partnership was to design and build a new "early years school" on the reserve territory formerly known as Fort Alexander.

The partnership agreement was signed in May of that year and then a contract was signed and work on the school was begun by the Sagkeeng/Wing Development Partnership in November 1997. Wing was designated "clerk of the works," meaning he was in charge of directing the actual construction. Within a few months, it became apparent the funding for the project had not been secured by the band council. Construction halted in January 1998 with Wing out of pocket more than $2 million. An independent analyst recently concluded that Wing is now owed just over $3 million.

When his claims for payment were not met, Wing hired Alan Isfeld to lobby government officials on his behalf. Isfeld is well known around Winnipeg as a tenacious and capable public relations specialist.

Isfeld took note of a Sagkeeng band council resolution issued Nov. 21, 1997, just before construction was begun, that stated departmental approvals and funding had been finalized. The band council resolution also authorized Sagkeeng/Wing Development Corp. to proceed with the school project. Isfeld said Wing took the band council at its word and spent close to $2 million in getting the project started. It was only when he asked the council for payment that he discovered the problem. Isfeld calls that criminal fraud.

After more than two years of working behind the scenes without success, Isfeld went public in a big way in early March of this year when he sent out a 20-page package by fax to more than 230 First Nation political organizations across the country. He believes the information - correspondence between himself and Deputy Prime Minister Herb Gray's office, copies of band council resolutions, as well as copies of letters from construction association leaders across the country, who urged the government to resolve the impasse - speaks for itself and paints a picture of a band council that's not playing fair.

A member of Manitoba's WayWaySeeCappo First Nation, Isfeld is well-connected with Native politicians in Manitoba. He told Windspeaker he helped raise money for former Sagkeeng chief Phil Fontaine's successful campaign for the leadership of the Assembly of First Nations in July 1997 and is disappointed that Fontaine has not intervened to pressure the council, which includes members of the Fontaine family, to settle up with Wing.

AFN spokesman Jean Larose told Windspeaker the national chief, who moved on to become Grand Chief of the Assembly of Manitoba Chiefs before moving to Ottawa to head the national organization, has had no involvement in the affairs of his home territory for quite some time.

The AFN leader's nephew, Jerry Fontaine, was the chief at the time the construction started. Another Fontaine relative - Ron Fontaine - is the present Sagkeeng chief. Isfeld believes that since Phil Fontaine helped begin the partnership process by introducing Wing to federal officials back in 1996, he could at least use his considerable influence to help bring the matter to a conclusion.

"They say you're doing this because you're mad at Phil. That's got nothing to do with it. I've been mad at Phil many times before and we've made up over the years. That's not a big deal. But this detrimental impact it's going to have on First Nations people is going to be something to behold if this thing isn't dealt with fairly and soon," Isfeld said. "Other construction associations are starting to look at this. There's lots of spin-off from this.

"Right now, these organization that wrote letters probably represent half a million businesses in Canada and they have friends who have friends who have friends and you can see how it just grows and grows. I'm concerned this is going to hurt us as Aboriginal people. Don is concerned that this is hurting his family. My concern is that this is going to impact us from all facets of business when it gets out and the fact that our leadership didn't step to the plate and say, 'Hold it, this is wrong. We can't allow this to happen. This injustice must be corrected. We're not in the business of victimizing our partners. We're not in the business of victimizing private sector business to gain a foothold on self government.'"

Isfeld has stepped up his crusade to see that Wing is paid, despite the fact that he and Wing have both said their business relationship ended in late February.

"There's no money to pay me," he said. "They put this company in dire straits. The minister put a process in place and they're not following it."

Copies of letters reveal that Indian Affairs Minister Robert Nault invited the parties to his Ottawa office on Oct. 8, 1999 to work out a resolution. Isfeld said the minister directed his staff to come up with a process where an independent accounting firm would have access to all pertinent records with the goal of recommending a just settlement.

A letter written by Wing to the minister on Feb. 26 shows that the PricewaterhouseCooper report, released on Feb. 8, concluded that Wing was owed just over $3 million. Isfeld insists the confidential agreement included a commitment from Indian Affairs to see that Wing received payment if that was the conclusion of the report.

In his letter, Wing quotes from the agreement he and Associate Deputy Minister Dennis Wallace negotiated which defines the scope of the PricewaterhouseCooper investigation:

"Item 4 in the agreement states, 'Upon submission of the PricewaterhouseCooper report, Wing and Associate Deputy Minister Dennis Wallace, toether with such other representatives as they may agree, shall meet and discuss the report to reach a final settlement sum to be paid to the Sagkeeng/Wing Development Partnership.'"

By March 20, the meeting had not materialized and Wing again wrote to the minister urging his help in speeding up the process.

During a March 22 phone interview, Wallace, the second-highest ranking bureaucrat in the Department of Indian Affairs, told Windspeaker that Wing's problems were with his partners in Sagkeeng and not with the federal government.

"The group, the partnership - which would be Sagkeeng/Wing - and the First Nation evidently did not close the loop on fully confirming the financing," Wallace said. "I note Mr. Isfeld's reference to a band council resolution, but I can only respond by saying that [former INAC associate deputy minister] Gary Wouters did meet on Oct. 9 [1997] and he indicated that we had to have an acceptable feasibility study to DIAND [before funding would be approved]. We had to look at financing models to facilitate the school construction and the completion of the project brief and we didn't have that. But evidently, as I say, the project did go ahead.

". . . quite clearly the partnership [was] integrally involved with the First Nation throughout the development. That's a matter that's between the First Nation and the Sagkeeng/Wing partnership. All that I can say is that we did confirm what was required, both orally and in writing, in October and November 1997."

Saying the department wants a solution because it is aware that a problem like this will scare other potential private sector companies away from partnerships with First Nations, Wallace backed away from committing the department to paying for Sagkeeng's mistake.

"When I say that, obviously this is a dispute between the First Nation and the Sagkeeng/Wing partnership, absolutely because partnership agreements between First Nations and the private sector, whether it's construction or any oter business, are essential to the economic development prospects of First Nations. The vast majority of them, in fact, perform very, very well indeed. So, I think we would all want, ranging from Mr. Wing through to chief and council, the department and all First Nations, want to see this come to an acceptable conclusion," he said.

Asked directly if the department sees the amount owing to Wing as a debt it has any responsibility to pay. Wallace stated, "There is no approved project. DIAND's not a signatory to the contract."

He said the band council is dealing with the PricewaterhouseCooper report and preparing its response.

"My impression is the First Nation is quite concerned about addressing the issue. My impression is they were quite open to meeting with Mr. Wing, however Mr. Wing has indicated this is something he's not prepared to do. I believe that's on the public record," he said.

Isfeld said he learned that department officials have told the council they are safe from civil action because of Indian Act protections against seizure of property located on a reserve. Wallace said that's a myth - that it is possible to sue a First Nation.

"It's simply not accurate and that's been confirmed with Mr. Wing directly. I did that. What's important, too, is that throughout there have been options available to the Sagkeeng/Wing partnership to resolve this. There's civil litigation. There are terms in the Sagkeeng/Wing, Sagkeeng partnership agreement for resolution of contract dispute. There are other bodies such as the Canadian Construction Association that can assist from time to time by identifying contractors who might be able to mediate a conclusion and I made that offer available in December 1999," he said.

Isfeld said Wing considers all those options proposed by Wallace to be non-options.

"Mr. Wallace is still trying to blame the victim," Isfeld said. "It's chief and council who are supposed to close the loop. Partnerships can't. It's not the partnership's r