Accounting still AWOL for Watson Lake housing

The Yukon government wants a peek at Liard First Nation's financial statements to determine how nearly $3 million in affordable housing money from Ottawa was spent.

The Yukon government wants a peek at Liard First Nation’s financial statements to determine how nearly $3 million in affordable housing money from Ottawa was spent.

The territory has made repeated requests for this paperwork for three years to no avail, said Dermot Flynn with Yukon’s land-claims secretariat. Disclosure of these papers is a requirement of the funding agreement struck between the First Nation and the territory, which serves as Ottawa’s bagman for distributing the funds.

Chief Liard McMillan chalks up the AWOL accounting to “reporting hiccups.”

“I’m not sure why it hasn’t gotten to them,” he said. “That’s being worked on now.”

The question of how the First Nation spent the federal funds first became a controversy in October when Yukon News obtained one page of the First Nation’s financials that describes how a portion of the funds were used to purchase the Gateway Motor Inn, and the Belvedere and Watson Lake hotels in June of 2007.

These acquisitions were justified on the basis that part of the Watson Lake hotel would be converted into affordable housing. But, at the time, hotel staff said no affordable housing was available at any of the facilities.

The Watson Lake hotel remained closed, its windows boarded up or smashed by vandals, until it burned to the ground in an apparent act of arson in April.

However, a building adjacent to the hotel, called the Campbell Block, survived the blaze and is currently being used, in part, as affordable housing for members of the First Nation, said McMillan.

The hotel acquisitions became all the more controversial because of the political connections of the former owners. They’re two close allies of Premier Dennis Fentie: Community Services Minister Archie Lang and Pat Irvin, a one-time campaign manager of Fentie’s and a member of Yukon Energy’s board. Both refuse to discuss the transaction.

McMillan continues to bristle at the suggestion that he “greased Archie Lang’s and Dennis Fentie’s wheels.”

After all, he campaigned against Fentie, who is Watson Lake’s MLA, during the last election. And he’s taken the government to task over its child services and forestry legislation.

“The money hasn’t gone into my back pocket. The money hasn’t gone into Fentie’s back pocket. The only question is whether the citizenry is satisfied with the amount of affordable housing. And that’ll take a lot more than the Northern Housing Trust.”

This week, in an effort to clear the air, McMillan provided Yukon News with a heap of documents to support his assertion the housing money was spent properly.

He insists the notorious note in his First Nation’s financial statements misrepresents how the hotel acquisition occurred.

To back him up, he’s provided letters from the First Nation’s auditor, Erik Hoenisch of Mackay LLP, and the First Nation’s corporate lawyer, Glenda Murrin, who both corroborate McMillan’s explanation of how the funds were spent.

It was a complicated, two-step transaction designed to ensure federal housing money never directly flowed from the First Nation and into the hands of the former hotel owners.

First, the First Nation’s development corporation purchased the hotels with two mortgage loans: one from a bank, and one from Lang and Irvin, who remain secured creditors.

(The sales price has never been publicly disclosed, but was rumoured to be approximately $3 million.)

Second, the First Nation bought the Campbell Block off of its development corporation using $1.14 million in affordable housing money.

The First Nation initially planned to house elders in the Campbell Block, said McMillan. But the cost of bringing the building up to code for this purpose proved prohibitive.

So, for now, the building is largely used to house hotel staff, and to put up the occasional First Nation member hard up for housing, he said. That includes women fleeing abusive relationships and members whose homes had flooded, said McMillan.

The First Nation still has plans to build a facility for elders on the property one day, he said.

Other housing money has helped build approximately five units and to renovate an additional 20 to 30 units, said McMillan. The First Nation had planned to build 12 houses. It still has approximately $500,000 in housing money remaining.

McMillan contrasts these projects against other, unspecified Yukon First Nations, who he says haven’t “spent a dime” of their affordable housing funds, and have instead invested the money.

But the territory’s bean counters are bound to have plenty of questions when they receive the First Nation’s paperwork.

To start, First Nation’s auditor only offered a qualified opinion on the reliability of the 2009 financials. In part, this is because the auditor was “unable to obtain satisfactory evidence of the value of the First Nation’s investment in Liard First Nation Development Corporation.”

The previous year, the auditor issued an outright denial of opinion, which is just about the worst thing an auditor can say. It means the First Nation’s books were in such disarray the auditor can’t vouch for the reliability of the records.

McMillan says this needs to be taken in context. The First Nation’s financial records have long been a mess. He blames his disgraced predecessor, Daniel Morris, who left office amid allegations he had improperly lent $250,000 in band money to members.

The Watson Lake First Nation continues to face many challenges, but McMillan offers examples of how conditions have improved. The First Nation is now one of the town’s biggest landowners.

It is chipsealing roads, laying sewer lines and building houses for its members. And it now owns hotels, which ought to provide revenue to a First Nation that lacks a land claim agreement.

“It’s not perfect, but things are getting better,” McMillan said.

Ottawa’s Northern Housing Trust provided a total of $50 million to the Yukon between 2006 and 2008. Of that, $32.5 million was given to First Nations. Liard First Nation received $2.83 million.

One other Yukon First Nation didn’t meet the fund’s reporting requirements: the Kluane First Nation, which received $1.3 million. Calls to Chief Wilfred Sheldon were not returned before deadline.

Contact John Thompson at

johnt@yukon-news.com.