Third-party management

Starve or submit: How one First Nation remains in servitude to a private accounting firm

Algonquin of Barriere Lake kept in the dark about their own finances
Allan Lissner/Barrier Lake Solidarity

On Tuesday, the Standing Committee of Indigenous and Northern Affairs Canada met to further its investigation into the controversial Default Prevention and Management Policy, which has been particularly devastating to a small First Nation living just a few hours north of the nation’s capital.

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A team of accountants in Quebec City manages the finances of the impoverished Algonquin of Barriere Lake, a First Nation located 600 kilometres away. These third-party managers pay themselves $550,000 a year for this service out of the budget the community relies on for health care and housing. Of the band’s meager annual budget, 10 per cent now pays for this dubious service, and every year deep cuts to community programs are required in return.

More troubling questions surround this arrangement. Why is this First Nation not privy to financial statements supposedly done on their behalf? How can the federal government, responsible for forcing this external control on the community, justify the costly imposition? How is it possible that for 11 years, despite multiple regimes of supervision by highly paid private accounting firms, these financial managers have yet to resolve the initial debt?

‘It has nothing to do with improving our living conditions’

Chief Casey Ratt of Barriere Lake described to the Standing Committee how the accountants have full control over the Algonquins’ lives, yet there is no accountability and transparency in the process, and no exit strategy for third-party management to end.

“There is nothing to link TPM [third-party management] to positive outcomes for our community. It has nothing to do with improving our living conditions or the lives of our people,” he stated.

The stranglehold on the community is cruel and must end immediately.

The Algonquins of Barriere Lake are one of nearly a quarter of First Nations across the country currently under third-party control, but their experience with the policy is exceptional for its breathtakingly Kafkaesque opacity and its devastating social and economic consequences.

Prior to third-party management, Barriere Lake was under a co-manager who deepened the band’s deficit, driving it above acceptable limits. Dissatisfied, the band informed Indigenous and Northern Affairs Canada of their intention to hire a new co-manager, but instead third-party management was imposed.

Financial transparency

Third-party management is the most extreme form of an escalating set of interventions deployed when bands are struggling with financial administration. For a community, it means total loss of control over band funds to an external accounting firm hired by and accountable to INAC.

Barriere Lake has never agreed to share their land or resources in a treaty. It seems more than accountants are benefitting from this situation.

Over the past decade, Barriere Lake has paid millions of dollars to third-party managers such as financial corporations Atmacinta Hartel and Lemieux Nolet, and yet the band is still in deficit. With exorbitant fees to third-party managers dinging an already impoverished budget, there is no way to generate surplus to pay down the penalties and interest that continue to accrue to outstanding government debts for provincial services.

Because of their lack of participation in their own financial management, Barriere Lake did not comply with the First Nations Financial Transparency Act, enforced by the previous Harper government. The community simply refused to be accountable for management that they had no control over and documents they had not seen. As a result, the community was sued by INAC. There has yet to be a resolution to the suit, even with a change in government.

A stranglehold on a nation without treaty

While third-party managers are meant to build financial capacity in the community, no such services have been provided to the community.

“Despite population growth, terrible overcrowding and a lack of housing stock, no new houses have been built at Rapid Lake [reserve] since 1995,” said Chief Ratt.

“In the past 10 years none of the TPMs have worked with us so we can develop a capacity to take over management of programs. There is no exit plan. We do not receive regular financial statements from the TPM, so our staff are unable to carry out their responsibilities properly. In a normal situation we would expect to get monthly statements, but the TPM refuses to provide them except once every three months. Notices of layoffs come suddenly and without warning.”

In the meantime, mining companies seek to drill their land and timber companies continue to haul lumber. Barriere Lake has never agreed to share their land or resources in a treaty. It seems more than accountants are benefitting from this situation.

The stranglehold on the community is cruel and must end immediately. Months of testimony will add delay to an excruciating situation. As Cindy Blackstock says, children only get one life. How many times must Barriere Lake repay their debt before their servitude is over?

Dr. Shiri Pasternak is an assistant professor in the School for the Study of Canada at Trent University. She is also a long-time member of the Barriere Lake Solidarity collective, and the author of the forthcoming book Grounded Authority: The Algonquins of Barriere Lake Against the State.

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