By Jorge Barrera
APTN National News
Under the leadership of former grand chief Ron Evans, the Assembly of Manitoba Chiefs drained a charity created for First Nation education by using it as a piggy bank to cover its debts, APTN National News has learned.
That practice now threatens the future of the charity.
Between 2008 and the summer of 2011 when he left his post as grand chief of the Assembly of Manitoba Chiefs, Ron Evans oversaw at least 10 transactions between his organization and the First Nations Education Trust Fund, a registered charity created to finance bursaries for First Nation students and promote education around issues like treaties, according to an internal financial report obtained by APTN National News.
The transactions ranged from tens of thousands of dollars to the hundreds of thousands of dollars each time and eventually drained the fund.
Just before Evans left his post, the AMC borrowed $295,000 from the fund on July 25, 2011 to meet the organization’s payroll and keep its bank account from falling into an overdraft of $275,399, according to the financial report, done by BDO Canada Financial Services.
Added to what the AMC owed in a line of credit, by the time Evans departed, the organization was essentially facing a $1.4 million debt.
The education fund was also left with about $5,000.
APTN National News has learned that Evans was involved in discussions around the decisions to transfer the money between the fund and the AMC.
Despite repeated requests, Evans, who is now chief of Norway House, could not be reached for comment.
According to the internal financial report, the AMC under Evans used the education fund for “bridge financing when AMC was facing a shortage of cash flow to meet its payroll and operational commitments.”
The use of the fund in this way, however, could run it afoul of the Canada Revenue Agency, and also put its directors in trouble, says the BDO report, dated September 2011.
“As a result of these loan transactions, (the fund) is at risk of losing its charitable status and its assets,” said the BDO report. “The directors…are also at risk as they can be held to the same standards in court as trustees of a trust. They could therefore be liable for a breach of trust for mismanaging charitable assets.”
The loan transactions also left little in the form of a paper trail.
“Virtually no documentary paper trail exists to document the issuance of these loans other than cheque requisitions within (the fund) to provide the funds to AMC,” said the report.
APTN has also learned that while technically an independent entity as a registered charity, the fund has always had historically close ties to the AMC. The fund’s board of directors worked for the AMC which also appointed them to the positions. The AMC also at one point paid property taxes owed by the fund and was involved in the transfer of donated land that, after it was sold, eventually provided a major cash infusion for the fund.
Under Evans, the view among senior officials was that the AMC and the fund had a reciprocal relationship and that the fund’s governing rules allowed for investments. The AMC and the fund’s directors saw the loans to the AMC as short term investments and the AMC was, in theory, supposed to pay the money back with interest.
That rarely happened, according to the BDO report. Seven out of the 10 loans “recovered no interest income for (the education fund).” For the three that did recover interest, the report found that the rate was “below what should have been charged for an unsecured high risk demand loan.”
One $200,000 loan from the fund to the AMC made in Nov. 28, 2008, was paid back 218 days later with $1,200 in interest, which equals to an about 0.006 per cent interest rate, according to information obtained by APTN National News.
In another instance, the fund transferred $150,000 to the AMC on June 10, 2009, and then received a matching deposit on June 30 of that year from the organization.
The BDO report estimated that the AMC owed the fund about $20,000 in unpaid interest.