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Manitoba reserve being probed over loans, advances

OTTAWA -- A First Nation on the shores of Lake Manitoba is being investigated over loans and advances paid to its former band council and staff, newly released documents show.

Professional auditors from the firm KPMG are also looking into payments made to build off-reserve housing as well as social-assistance payments to senior administrators and the former chief and councillors of O-Chi-Chak-Ko-Sipi (Crane River) First Nation. No charges have been laid and none of the allegations has been proven in court.

Documents obtained by The Canadian Press under the Access to Information Act provide an overview of KPMG's audit work, which covered the period from April 2009 to March 2012.

The auditors were asked to take a closer look at loans and advances paid to 13 people who were "certain senior administrators, or were members of the council," the documents show.

The firm was also asked to look into payments made for the construction of off-reserve housing, as well as social-assistance payments to people who worked for the First Nation or were members of its band council.

KPMG was to report back to Aboriginal Affairs and Northern Development Canada by March 2012. However, The Canadian Press has learned the company is still involved in the investigation. KPMG has not responded to questions about its audit work.

In May 2013, a senior official at Aboriginal Affairs wrote to the current chief, Eugene Eastman, asking him to authorize the First Nation's co-manager and its auditor to turn over documents to KPMG.

"The assessment and investigation services branch will conduct audit work to provide assurance that... funds disbursed to the First Nation have been used for the intended purposes; and that the O-Chi-Chak-Ko-Sipi complied with the terms and conditions of the funding arrangements," Sylvie Lecompte, head of the department's investigations unit, told Eastman in an email.

The focus of the department's audit work is on $7.8 million in federal funding, she wrote, which included an emergency injection of $3.4 million to build sandbag and clay dikes during the 2011 flood.

Department officials did not answer specific questions about the audit. Instead, a spokeswoman for Aboriginal Affairs Minister Bernard Valcourt said she could not comment on the audit because the investigation is not over.

"We will not tolerate the abuse of tax dollars. That is why we have asked an audit firm to look into the allegations and report back to us," Andrea Richer wrote in an email. "Since the investigation is still ongoing, it would be inappropriate to comment further."

Eastman -- who became chief of the First Nation in May 2012, two months after the end of the audit period -- declined to comment.

-- The Canadian Press

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