Division and the First Nations Financial Transparency Act - Part 1

There are four main players involved with the First Nations Financial Transparency Act: Aboriginal Affairs and Northern Development Canada (headed by its Minister), First Nations leaders, First Nations members, and the general public. The Act has unified all four in the name of accountability and financial transparency, but it has also divided AANDC and leaders, leaders and band members, and band members and AANDC. The general public, whom the Act is supposed to benefit, often understands the complicated situation the least of them all.

First Nations who oppose the Act often argue the reporting they need to do is more thorough than what other organizations need to do, and could compromise business interests if all such information is public. The issue isn’t just about disclosing salaries – it’s about how paternalistic and punishing the Act can be.

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Harrison and Todd

When asked for his number, Harrison Thunderchild said “Four.”

“Bobby Orr,” he laughed.

Thunderchild has roots in Thunderchild First Nation. He calls the North Battleford area “home country” and cheers for the North Stars. He now lives in Saskatoon.

Harrison Thunderchild and the Canadian Taxpayers Federation recently launched a court application against Thunderchild First Nation, to compel the First Nation to comply with the First Nations Financial Transparency Act. Rather than proceed in court, the First Nation released its information. The information included the band’s audited financial statements and documents showing salaries and expenses for chief and council in past years.

Thunderchild, along with Todd McKay of the Canadian Taxpayers Federation and band members, were filming a segment on March 15 at River Landing East in Saskatoon. The financial information was presented in big white binders. News media had come and gone.

“It’s a very good day,” Thunderchild said.

He said he and other band members were concerned with the financial picture of the First Nation. He said chief and council’s relationship regarding public disclosure of information wasn’t based on the traditions of the Thunderchild Cree, but driven by something else. The Cree name of Harrison’s father, Sapwasohpihness, means truthful spirit so clean you can see right through it.

Despite the disagreement with the First Nation. Harrison Thunderchild said “I’m still able to call my nephews nephews, my nieces nieces, and family family.” Thunderchild is related to members of the band’s administration, including Chief Delbert Wapass. 

“I honestly believe in my heart this resolved quickly because [chief and council] ultimately remembered what their traditional roles were,” Thunderchild said. “And it’s not on policy and principle handed down by bureaucracy from Ottawa. It’s rather a fundamental upbringing we have as Cree people, where its foundation is respect.”

Thunderchild said he’s not interested in seeking leadership positions, and salaries of chief and council are “something band members need to talk about in the next election.”

McKay said transparency is important for band members. The CTF has long been supportive of the Act.

“For a lot of band members, it can be a really hard thing to ask chief and council for information, particularly if there is any kind of animosity or concern,” McKay said. “And so to have that up there publicly so people can get that information without risk is really important.”

The Act

The First Nations Financial Transparency Act was passed in 2013 and came into effect April 1, 2014. It was meant to “enhance the financial accountability and transparency of First Nations.”

Before and after the Act passed, many First Nations annually complied with local and federal laws regarding financial disclosure to band members.

Aimée Craft of the Canadian Bar Association wrote in 2012 some First Nations “have had financial regulations and budgetary laws for decades, adopted under their own constitutions or customary laws.”

Other First Nations left band members in the dark about their financial goings-on.

According to the Act, a First Nation must maintain its accounts and prepare consolidated financial statements annually. These statements show information including assets, liabilities, equity, income, expenses and cash flows of the First Nation “and of those entities that are required by those principles to be included are presented as those of a single economic entity, as if the First Nation were a government reporting on its financial information.”

The financial statements must be audited by an independent auditor, and a First Nation must annually prepare a document called a “Schedule of Remuneration and Expenses” that lists remuneration paid and expenses reimbursed to its chief and councillors.

According to section 7 of the Act, the First Nation must provide copies of the above financial information at the request of any of its members.

According to section 8, a First Nation must publish the documents on its own Internet site within 120 days after the end of each financial year, with the information remaining accessible to the public for at least 10 years. The information would also appear on the Aboriginal Affairs and Northern Development Canada website. (AANDC was formerly INAC, an abbreviation of Indigenous and Northern Affairs Canada.)

Section 10 of the Act says if a First Nation doesn’t provide copies of the above financial information to band members, any member of that First Nation can apply for a court order. Section 11 states if a First Nation doesn’t publish documents under section 8, the Minister, or any person, can apply for a court order.

Section 13 details penalties for First Nations not complying. The Minister could require the council to develop an action plan, “withhold monies payable as a grant or contribution to the First Nation under an agreement that is in force” until the First Nation has complied, or terminate any such agreement. 

Two sources of revenue for First Nations include transfer payments from the federal government, and own-source revenue, which is developed through a variety of business interests. Revenues fund a number of things on First Nations, including education, health, water, sanitation, child and family services, housing, and many others. Different First Nations bring in different amounts of revenue, different amounts of transfer payments, and different amounts of own-source revenue.

Many First Nations leaders were in favour of the Act and weren’t concerned with having funding withheld. Some weren’t in favour of it for various reasons. Sections 8, 11 and 13 of the Act caused the most disagreement.

Thunderchild First Nation and Onion Lake Cree Nation voiced opposition to the Act, and in the past didn’t comply. Both First Nations have substantial business interests, particularly involving oil production.

Shiri Pasternak, Assistant Professor in Criminology at Ryerson University, has written many First Nations have criticized the Act as a public relations stunt, since band accounts were previously fully disclosed to government agencies prior to the Act taking effect.

Pasternak wrote the Act “forces First Nations to publicly report all income, expenses, and business revenue to the public, imposing standards that far exceed those for municipal, provincial, and federal authorities.”

In a media scrum outside a Saskatoon courthouse in 2015, Assembly of First Nations regional chief Bill Erasmus explained an oft-repeated argument against the Act.

“We have our First Nations entities, they include our corporations which are in competition with other private entities and public corporations and government corporations and so on. None of the other corporations have to reveal their sources of funding and their spending to the extent that our First Nations do,” Erasmus said.

“Members of our communities have the ability to get the information, all they need to do is go to our band offices and ask for it.” 

“What the federal government wants us to do is to publish it to the world, and it’s got nothing to do with the rest of the world.”

Former Conservative MP Rob Clarke (who briefly ran for Saskatchewan’s premiership last year) said in a House of Commons Standing Committee meeting in 2012 that the requirement to publish on the Internet is a result of over 50 per cent of First Nations band members living off-reserve. He also said some band offices refuse to distribute financial statements to band members.

Crown lawyers have argued the reporting pertaining to First Nations business that is accessible to the public in the documents is minimal.  

Joseph Quesnel of the Fraser Institute wrote in 2018:

“Indigenous leaders who resist transparency unfortunately divide their own membership by claiming that this sort of commonplace transparency is somehow anti-First Nation or an infringement on Indigenous self-government.”

CTF and AFN: Battle of numbers

The Canadian Taxpayers Federation and the Assembly of First Nations have been in disagreement about the Act (and its previous forms – Bill C-575 and, later, Bill C-27) – since at least 2010. Bills C-575 and C-27 are markedly different but feature similar ideas.

“The AFN has always supported the principle of fiscal responsibility – but not in the manner set out by the CTF,” according to the AFN document “The Straight Goods on First Nations Salaries.”

The AFN document was written in response to the 2010 CTF release, “New jaw-dropping reserve pay numbers.”

According to the CTF, approximately 50 reserve politicians were paid more than the Prime Minister in 2008-2009, approximately 160 reserve politicians were paid more than premiers in their respective provinces in 2008-2009, and over 600 First Nation elected officials received an income that is equivalent to over $100,000 off-reserve.

AFN took issue with these points. AFN wrote the CTF included the calculation of ‘other’ remuneration and ‘travel/per diems’ in First Nations salaries, which the AFN wrote was not methodologically correct. The AFN’s recalculation of the original figures provided to the CTF by INAC “using actual salary dollars and honouraria” found 21, rather than 160 First Nation officials earned more than their respective premiers, along with other different findings. 

AFN wrote the CTF created alarmist stories which “have the tendency to stick in people’s imaginations” and “gave the inaccurate implication that First Nations leaders are corrupt.”

Donald Gutstein, of Simon Fraser University’s School of Communication (and who has been described as a media critic), published a book in 2014 called “Harperism: How Stephen Harper and his Think Tank Colleagues Have Transformed Canada.” He described the 2010 incident.

“A brief battle of numbers ensued, although it wasn’t much of a battle,” Gutstein wrote. “In terms of positive media coverage, the CTF campaign outgunned the Assembly of First Nations defence by a wide margin,” with attention-grabbing headlines featured in the National Post, Winnipeg Free Press, and Calgary Herald. 

“It didn’t take long for the media to make the connection that the antidote to such shocking salaries was Kelly Block’s [C-575] bill.” 

Media wasn’t interested in the AFN’s response to the CTF, Gutstein wrote.

Meanwhile, the AFN “passed a resolution requiring elected band officials to disclose their salaries and other funds to their members.” 

Bill C-27

On Parliament Hill, the first reading of Bill C-27 occurred on November 23, 2011. Much of the text is the same as the current Act, but has some differences.

Suggestions regarding changes in wording from the Bill to the Act can be observed from an Oct. 17, 2012 Standing Committee on Aboriginal Affairs and Northern Development. Standing Committees bring in witnesses to comment on legislation as it develops. Standing committees consist of MPs from different federal parties.

Jody Wilson-Raybould, while acting as the regional chief of the B.C. Assembly of First Nations (she is currently the Minister of Justice and a Liberal MP), was brought in to speak on the Bill. She said, similarly to Erasmus, that the wording of the Bill in October 2012 established a double standard regarding the amount of financial information First Nations must report, versus how much other entities must report.

Chief Darcy Bear of Whitecap Dakota First Nation, along with chartered accountant Lisa Dunville were invited to speak at the meeting. 

The business interests of Whitecap Dakota First Nation include a casino and golf course near Saskatoon.

At the meeting, Bear said he spoke on behalf of his community rather than any other First Nation. 

Bear supported the principle of the bill, citing how financial transparency among band members was an important step toward economic development. 

“When people are looking at the business environment, they also are going to want to look at the financial record of that community. It’s no different from an investor going around the world and looking at different countries and asking, ‘Am I going to invest there? Is there leadership, stability? What kind of governance structure do they have? What is their financial track record, etc.? What kinds of laws do they have?’ It’s a similar thing when you’re investing on reserve.”

Bear said he’d like the wording of the Bill to separate remuneration from expenses, which the wording of the Bill didn’t do at the time.

“You have the private sector off reserve and they have certain reporting requirements, but if they go on reserve and they have to disclose their competitive information to all of their competitors, they’re going to say they don’t want to go on reserve, that it’s not right for them.”

Dunville made comments regarding “generally accepted accounting principles,” which the Bill didn’t have at the time. 

“The requirements of generally accepted accounting principles that apply to governments right now are very specific, that they specifically exclude government business enterprises. For that reason, under generally accepted accounting principles, you don’t want to have a co-mingling of requirements under private enterprise and public governments that are publicly accountable.”

Dunville also commented on the wording “control,” which appeared in the Bill’s first reading.

“To clarify the Bill, what we’ve said is that the wording should just follow what is required to be disclosed in the consolidated financial statements of the First Nation, which would specifically exclude government business or enterprises or private enterprises. That is a requirement under generally accepted accounting principles.”

Bear didn’t want all the information on the Internet.

“It shouldn’t be available to everyone. I don’t think it’s everybody’s business what we’re doing.”

The Act, as opposed to the Bill, that was passed in the House, included the wording “in accordance with generally accepted accounting principles” five times. “Control” was removed. Remuneration and expenses were separated. The requirement to publish financial information on the Internet remained.

Part 2 is available here.

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