Ottawa refused to check cheques

Daniel Morris wants to be chief of the Liard First Nation once again. He seems a longshot candidate if there ever was one.

Daniel Morris wants to be chief of the Liard First Nation once again.

He seems a longshot candidate if there ever was one. Morris was removed from office in disgrace in 2003 following his conviction of the brutal beating and rape of his estranged common-law wife.

Another, unresolved scandal still hangs over him. Shortly after Morris departed, the First Nation’s present chief, Liard McMillan, announced Morris had overpaid himself by more than $250,000 during his tenure in office.

Yet Morris never faced criminal charges, nor a civil action.

Why? Because a forensic audit was needed to pursue such a complicated case. And nobody was willing to pay for it.

The First Nation couldn’t afford to bankroll the audit itself. It would have cost between $500,000 and $800,000, said McMillan. So he lugged seven bankers boxes of papers to the RCMP detachment and asked them to investigate.

Police would later seize an additional 148 boxes from the First Nation. Ottawa funded an early probe that confirmed much of what McMillan alleged.

But the Department of Indian

and Northern Affairs found there was no proof the misspent money came from their department. So they closed the case.

“They swept it under the rug because they don’t want to be embarrassed,” said Alfred Chief, an elder with the First Nation who visited Whitehorse this week to talk with a lawyer about the possibility of still pursuing a civil action against Morris.

In Chief’s view, Indian Affairs broke its duty to protect the First Nation by abandoning a forensic audit. As a result, he thinks justice wasn’t done.

Morris didn’t return calls to the Yukon News yesterday. But documents obtained by the News tell the tale of how Ottawa investigated the case, found what appeared to be wrongdoing, and then washed its hands of the matter.

From December 1998 to October 2003, Morris collected more than $250,000 in excess of his approved salary, according to investigators hired by the First Nation. A chartered accountant would later verify this information, as would auditors with KPMG, who were hired by Indian and Northern Affairs.

These payments were first called “professional fees.” They were later reclassified as repayable loans, according to a KPMG report prepared in February of 2008.

Approximately $100,000 of that money was repaid through payroll deductions, leaving an unpaid balance of $150,000.

Morris still owes that money, said McMillan. “He never paid back one red cent,” he said.

Other members received these so-called loans, too. But Morris received far more than anyone else, having received two-thirds of the total missing money. The second-largest loan balance was for $15,000.

Morris, meanwhile, received $36,000 in a single day, “in three separate cheques, with no backup and no approval.”

Morris also appears to have received $117,000 for expenses. “A thorough examination of expense accounts and supporting documentation, if available, would be required” to see if this money was properly spent, according to the auditors at KPMG.

It’s exactly that type of work that Ottawa was unprepared to pursue.

Last, Morris received more than $67,000 in reimbursement of income taxes withheld from his salary. This was part of a broader scheme that saw more than $1.5 million set aside for Revenue Canada instead disbursed to band members.

Liard First Nation continues to fight Revenue Canada in federal court over the matter.

The auditors at KPMG were given a narrow mandate by Ottawa: they were only to pursue a fullblown forensic audit if they could prove that misspent money originated from Indian and Northern Affairs.

That proved impossible. Once government money flows into the First Nation’s general revenues, there’s no way to trace back how specific funds were spent.

“It’s all painted the same colour once it’s in there,” said McMillan.

Yet funding from Indian Affairs makes up two-thirds of the First Nation’s revenue. Federal funds make up three-quarters of the money the band receives.

On top of all this, there’s actually evidence that money delivered by Indian Affairs, and earmarked for specific programs, was spent on personal loans. This is described in two compliance audits done by regional Indian Affairs staff.

Auditors asked for details, and whether Morris was a recipient. Indian Affairs never responded.

So the auditors had no choice but to close the case. They conclude in their report that a full audit “would not yield additional benefits” for the department.

The auditors also noted that “the RCMP had investigated and determined that there was no criminal wrongdoing.” But that’s largely because a forensic audit was needed to build the case.

“This is a complex investigation and one that would benefit greatly from having a forensic audit completed,” wrote Cpl. Steve Alexander of the Whitehorse RCMP to McMillan in June of 2006.

In November of that year, Yukon MP Larry Bagnell called on Jim Prentice, then minister of Indian and Northern Affairs, to complete an audit: “should you be truly committed to the Conservative’s covenant towards accountability and transparency, you will act on this issue in a timely and responsible fashion,” Bagnell wrote, to no avail.

This was at a time when the federal Conservatives were pushing their Federal Accountability Act, which would have required First Nations to face the scrutiny of Canada’s auditor general. But, after the Assembly of First Nations mounted fierce opposition, this measure was stripped from the bill before it became law.

It would take another two years before Indian Affairs launched its review of the First Nation – with restrictions that seemed to ensure a full audit would not happen.

McMillan swept into power in 2003 as a reformer promising to clean up the First Nation’s financial mess. He now faces controversies of his own, involving the First Nation’s purchase of three hotels that was financed, in part, with affordable housing money.

“Here I am, with my name being dragged through the mud,” said McMillan. “It’s utterly disappointing for me.”

Morris also vied to be chief in the last election, in 2007. He finished in last place in the three-way race, receiving 87 votes.

Liard First Nation members head to the polls on Monday.

Contact John Thompson at