Ta’an threw good money after bad: audit

Two plexiglass-clad motorboats that languish in a Whitehorse storage lot are all that Ta'an Kwach'an Council members have to show for investing $850,000 in Great River Journey, the failed adventure tourism outfit.

Two plexiglass-clad motorboats that languish in a Whitehorse storage lot are all that Ta’an Kwach’an Council members have to show for investing $850,000 in Great River Journey, the failed adventure tourism outfit.

Auditors reckon the two boats, purchased for $600,000, are now worth just $175,000.

But what really puzzled the beancounters at Blair Mackay Mynett Valuations Inc. of Vancouver, which the Ta’an hired to conduct a financial investigation of the First Nation’s recent investments, is that the Ta’an board of directors approved the purchase in the first place.

“Any amount of proper due diligence would have suggested that in July 2009, further investment in Great River Journey Inc. would be ill-advised,” states the January report, obtained by the News. “This was not a sound investment decision.”

The Ta’an was one of four First Nations to initially invest $250,000 in the failed startup, along with the Kwanlin Dun, Tr’ondek Hwech’in and Selkirk First Nations. They all ended up soaked when the company declared bankruptcy in November.

The investment in Great River Journey was just one of many concerns raised by auditors.

As of March 2010, the First Nation had sunk $4.6 million into its development corporation as “loans and advances.” But, for now, “There is almost no possibility of repayment of these loans … without liquidation of its assets.”

What’s more, the corporation’s officials routinely refused to share information with their political masters. The First Nation’s board of directors and audit committee “have been frustrated by the lack of transparency and information flow resulting from what we consider to be very artificial and unnecessary barriers,” the report states.

Auditors also found “several significant breaches of internal financial controls,” including one case of a former chief cutting an unauthorized cheque. The good news is that all of this money was spent as it was supposed to, on the First Nation’s questionable investments.

If sloppy spending practices continue, the First Nation’s piggybank will be empty by 2018, auditors warn. A “significant reduction” in administrative expenses is needed to avoid further dipping into reserves, which still hold more than $20 million in savings.

The report does not reflect well on Ruth Massie, who was Ta’an’s chief until October of 2009 and is presently grand chief of the Council of Yukon First Nations. It alleges she authorized several financial transactions without the required board approval.

Massie, who is on leave following the death of her husband last week, did not respond to an interview request.

In one case, Massie cut a $90,000 cheque for a real-estate deal three days before the transaction was approved, the audit states.

In another case, the report states that Massie asked the finance director to divert more than half of the First Nation’s federal housing trust money – $904,000 – to cover operating shortfalls and cost-overruns for the development of a 43-hectare land block in Forestview, near Hidden Valley School. This was also done without the required board approval.

And it was done in two stages, over three months. Auditors gave the finance director the benefit of the doubt the first time, but during the second instance, “He should have been aware that a transfer from trust was a transaction that would require the board of directors’ consideration and approval.”

The Forestview development was supposed to be largely paid for with $927,000 chipped in by Ottawa and the Yukon government. But nearly half of those funds were diverted to “day-to-day operations” of the First Nation and to cover project shortfalls.

So, in a case of robbing Peter to pay Paul, the northern housing trust funds were put in their place. The housing trust funds were eventually replenished with money from yet another reserve.

Ta’an’s development corporation has a number of holdings, some profitable, some not. It has a stake in the Lynn and Bling buildings in downtown Whitehorse, which have both proven to be smart investments.

It also owns a piece of the waterfront condos being built by the Vuntut Gwitchin development corporation.

The Ta’an corporation owns a Black Street building in downtown Whitehorse that’s leased back to the First Nation. The auditors suggest that if the First Nation is the sole tenant, “it would make sense” for it to own the building outright, rather than pay its business arm $88,000 annually in rent.

And the corporation has sunk more than $822,000 into buying and maintaining the Bahai Centre in Deep Creek. According to the report, “The usefulness of this investment has been called into question, as it produces no significant return on investment.”

The Forestview land, to be turned into rural residential lots, should prove lucrative. The project is “virtually complete,” except the First Nation must first approve its draft Land Act. Auditors urge the First Nation to do this soon, “to start realizing a return on this significant investment.”

The report, which cost $40,000, concludes with a long list of sensible recommendations to make the First Nation’s operations leaner and more transparent.

It remains to be seen which of these recommendations will be acted on. Chief Brenda Sam declined to comment.

Contact John Thompson at

johnt@yukon-news.com.

Just Posted

Whether the dust jacket of this historical novel is the Canadian version (left) or the American (right), the readable content within is the same. (Michael Gates)
History Hunter: New novel a gripping account of the gold rush

Stampede: Gold Fever and Disaster in the Klondike is an ‘enjoyable and readable’ account of history

Yukonomist Keith Halliday
Yukonomist: Your furnace and your truck need to go

Perhaps the biggest commitment in the NDP deal with the Liberals was boosting the Yukon’s climate target

Awaken Festival organizers Meredith Pritchard, Colin Wolf, Martin Nishikawa inside the Old Firehall in Whitehorse on May 11. (Haley Ritchie/Yukon News)
Performing arts fest plans to awaken artistic talent in Whitehorse and the rural North

‘A value of ours is to make theatre as accessible as possible.’

April Mikkelsen tosses a disc during a ladies only disc golf tournament at Solstice DiscGolfPark on May 8. John Tonin/Yukon News
Yukon sees its first-ever women’s disc golf tournament

The Professional Disc Golf Assocation had a global women’s event last weekend. In the Yukon, a women’s only tournament was held for the first time ever.

Dave Blottner, executive director at the Whitehorse Food Bank, said the food bank upped its services because of the pandemic. (John Tonin/Yukon News)
Food Bank sees Yukoners’ generosity firsthand

“Businesses didn’t know if they could stay open but they were calling us to make sure we were able to stay open.”

A prescribed burn is seen from the lookout at Range Road and Whistle Bend Way in Whitehorse May 12. (Stephanie Waddell/Yukon News)
Editorial: Are you ready for a forest fire?

Citizens for a Firesmart Whitehorse have listed some steps for Yukoners to boost safety and awareness

Caribou pass through the Dempster Highway area in their annual migration. A recent decision by the privacy commissioner has recommended the release of some caribou collar re-location data. (Justin Kennedy/Yukon News)
Privacy commissioner recommends release of caribou location data

Department of Environment says consultation with its partners needed before it will consider release

Chief Medical Officer of Health Dr. Brendan Hanley. (Crystal Schick/Yukon News)
Family pleased youth will be able to get Pfizer vaccine

Angela Drainville, mother of two, is anxious for a rollout plan to come forward

Safe at home office in Whitehorse on May 10, 2021. (John Tonin/Yukon News)
Federal government provides $1.6 million for Yukon anti-homelessness work

Projects including five mobile homes for small communities received funding.

Drilling at Northern Tiger’s 3Ace gold project in 2011. Randi Newton argues that mining in the territory can be reshaped. (Yukon government/file)
Editorial: There’s momentum for mining reform

CPAWS’ Randi Newton argues that the territory’s mining legislations need a substantial overhaul

At its May 10 meeting, Whitehorse city council approved the subdivision for the Kwanlin Dün First Nation’s business park planned in Marwell. (Submitted)
KDFN business park subdivision approved

Will mean more commercial industrial land available in Whitehorse

Main Street in Whitehorse on May 4. Whitehorse city council has passed the first two readings of a bylaw to allow pop-up patios in city parking spaces. Third reading will come forward later in May. (Stephanie Waddell/Yukon News)
Whitehorse council pursuing restaurant patio possibilities

Council passes first two readings for new patio bylaw

Most Read