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New application needed for Stoney Nakoda Nation forensic audit, court rules

Alberta's top court ruled three members from the Îyârhe (Stoney) Nakoda First Nation will need to file a new application if they wish to pursue an independent financial audit of the Nation's elected officials.

ÎYÂRHE NAKODA – Alberta's top court ruled three members from the Îyârhe (Stoney) Nakoda First Nation will need to file a new application if they wish to pursue an independent financial audit of the Nation's elected officials.

Stoney Nakoda Nation (SNN) released its financial records missing under the First Nations Financial Transparency Act from 2018-22 as requested in a statement of claim by Kenny Hunter, Wanda Rider and Muriel Labelle, but any further review of the numbers before a judge will have to wait.

“In my view, there is not enough evidence, nor is there a proper application before this court to justify circumstances in which I’d be willing to appoint an independent auditor,” said Court of King’s Bench Justice Melanie Gaston at a Sept. 6 hearing.

Hunter, Rider and Labelle initiated legal action over SNN’s failure to publicly release its financial records, including chiefs and council salaries and expenses, as required by the First Nations Financial Transparency Act, and after failed attempts to access the information.

The band members, representing Goodstoney (formerly Wesley), Bearspaw and Chiniki First Nations, said there is concern in the absence of reporting of band funds and transparency over the last five years, and beyond.

They allege Stoney Tribal Council, which is responsible for overseeing numerous programs and services such as education, health, social services, and economic development for band members, as well as managing an annual portion of the Nation’s Heritage Trust Fund (HTF), has withdrawn tens of millions of dollars from the trust without seeking consent or approval from community members belonging to the three bands.

The Nation's HTF, held in Ottawa, has gone from a balance of $194.71 million in 2013 to $153.3 million in 2021, as per publicly available reports. The statements, which are audited by accounting firm Crowe MacKay LLP, do not specify where funds were used. 

Since the claim was filed in early May, SNN has released the requested financial reports in stages, with some released later that month. The matter was briefly heard in court June 15, but was scheduled to return to give SNN more time to submit all requested information. 

Hunter expressed disappointment after the most recent court hearing and said the band members are likely to file another application for a forensic audit to reveal where funds went.

“With this audit, we want to hold – if there is any money missing or unaccounted for, or any fraudulent activity – we want council to be held accountable,” he said

Paul Reid of Carscallen LLP and counsel to the applicants told the court the request for an independent forensic audit would also apply for schedules of chiefs and council remuneration and expenses, which, dating back to 2014, have undergone review engagements by Crowe MacKay.

“That’s where we’ve identified issues,” said Reid.

Whereas an audit is a full review, a review engagement is considered a “limited assurance engagement,” he argued.

“You’re relying on your client to tell you and the accuracy of your client telling you this is what the remuneration is, these are the expenses, and [you’re] relying on their reporting.”

Reid flagged a former councillor of Bearspaw First Nation, Rex Daniels, who received nearly $700,000 in expenses from 2017-22, with no explanation as to what expenses were for, in addition to regular salary, travel and other reimbursements.

“I think my clients and the other members of the band deserve to know that,” Reid said of the expenses. “It’s been five years. They haven’t complied with the act in five years, and putting the act aside, these are the members of the band … they haven’t seen the financials of their own band. They haven’t seen what chiefs and council are being paid. They haven’t seen the expenses that they’re receiving.”

Justice Gaston said the application in front of the court, however, did not take note of “anomalous” information in the statements provided, only that the documents were provided as ordered.

“I can’t take judicial notice on anything that you may find irregular or improper about those financial statements, at least for this application today,” she said, adding the applicants could pursue another application if of interest.

Tibor Ozvath, representing SNN with Calgary-based law firm Rae and Company, argued the First Nations Financial Transparency Act does not provide jurisdiction to appoint an independent auditor.

“From Stoney Nakoda Nations perspective there is no further remedy left or available to the applicants in this particular application,” said Osvath.

The court also addressed matters of expenses related to the application and legal fees, with Hunter, Rider, and Labelle seeking compensation. 

“This is public interest litigation, although it was brought privately by my clients, it’s in the interest of all the members of the band that this be disclosed,” said Reid. “The Nations had failed to disclose their financial reporting and remuneration and expenses from 2018 up until the time of this application.”

Reid further noted it was in cross examination of SNN’s CFO, Daryl Sands, that Sands said if it were not for the application, the reports would not have been released.

Legal counsel for SNN told the court Sands was not speaking on behalf of chiefs and council on that matter, and countered the band members’ request, stating costs associated with cross examination of the CFO and appearing in court should be awarded to SNN, in addition to the applicants bearing the costs of their own legal fees.

The matter is expected to return to Court of King’s Bench in Calgary Oct. 24 to determine compensation.

The Local Journalism Initiative is funded by the Government of Canada. The position covers Îyârhe (Stoney) Nakoda First Nation and Kananaskis Country.

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