MNBC Debt Recovery Process

The following letter was sent today to the Honourable Mary Polak, Minister of Aboriginal Relations and Reconciliation for the Province of British Columbia and the Honourable John Duncan, Minister of Aboriginal Affairs and Northern Development Canada for the Government of Canada…

The British Columbia Métis Federation (BCMF) is submitting this correspondence to your respective departments to further inform you of the gravity of the financial situation in the Métis Nation British Columbia (MNBC). It is important to note that MNBC is contracted under their nonprofit corporation known as the Métis Provincial Council of British Columbia (MPCBC) but the acronym MNBC will be used in this correspondence for consistency.

This letter and supporting attached documentation provides a factual detailed account regarding the continued failure of the MNBC to conduct business in a financially responsible manner. The focus of this letter will be to provide clarification on four (4) key issues regarding the MNBC Debt Recovery Plan released by the MNBC board in May 2011. The BCMF will identify to the federal and provincial governments the continued failure of the MNBC with respect to the management and handling of taxpayers’ dollars that they have received through government funding. In this respect BCMF has proposed a number of solutions including; third party management, independent forensic audit, direct government funding to BCMF in order that programs and services for the needs of the Métis people of British Columbia can be delivered in an accountable and transparent manner, etc.

I have attached the following documents to support the BCMF’s position:

  1. MNBC 2008-2009 Board of Director Expenses
  2. MNBC 2009-2010 Board of Director Expenses
  3. MNBC Combined Statement of Operations page 75 – Excerpt from the 2009-2010 MNBC Annual Report
  4. MNBC Schedule of Expenses page 83 – Excerpt from the 2009-2010 MNBC Annual Report
  5. MNBC Debt Recovery Plan dated March 2011
  6. MNBC Board Minutes dated June 7th, 2011
  7. MNBC Debt Recovery Plan Q and A’s

Issue #1 – Primary Reason for the Intensifying MNBC Debt

The MNBC has created large-scale debt according to the MNBC financial statements from April 1st, 2008 – March 31st, 2010. The MNBC debt has grown by approximately $2 million during this short period, a fact established by the BCMF in previous correspondence.

A question that needs to be posed to the MNBC is, “How did this occur?” BCMF believes the primary reason for the debt is due to MNBC overspending on administration, a large component of the administrative cost consists of MNBC’s annual board expenses. MNBC board expenses were $703,322.74 in 2008-2009 and $699.153.01 in 2009-2010, attached for your review.

A closer examination reveals that according to the MNBC 2009-2010 financial statements page 75, MNBC overspent on the administration of programs in this period by $965,762.00. The same MNBC financial statements further reveal on page 83 that the MNBC administrative expenses were actually $2,469,505.00 resulting in administration costs of 20% overall during that 12 month period. Therefore this is the highest administration cost ever charged in the history of the MNBC.

The predominant cause of the MNBC financial debt is obvious, overspending by the board of directors as the2009-2010 board expenditures account for roughly 1/3 of these total administrative expenses. If the MNBC board reduced the board member salaries and expenses by fifty percent MNBC could have kept their administration charges within the 15% range, a fiscal standard used through Aboriginal and government funded programs in Canada.

Issue #2 – Lack of MNBC Public Accountability

The MNBC has not made the 2010-2011 MNBC Financial Statements publicly available although requested by the BCMF in July 2011. In the past, MNBC signed off their previous annual financial statements as follows:

  • March 31st, 2008 (for 2007-2008) signed off July 14th, 2008;
  • March 31st, 2009 (for 2008-2009) signed off July 9th, 2009;
  • March 31st, 2010 (for 2009-2010) signed off August 20th, 2010.

Considering the past three years, it should be expected that MNBC would disclose the financial statements to their BC constituents, when requested. Sadly, this has not been the case. BCMF members (formerly known as the Coalition of Concerned Métis Citizens) requested a copy of the MNBC financial statements for 2009-2010 in July 2010, but this request was ignored by the MNBC at that time. Moreover, the MNBC only released the 2009-2010 statements days prior to the September 2010 Annual General Meeting thereby limiting the ability for Métis people to review these statements. Please note that the 2009-2010 MNBC financial statements were the first disclosure regarding the gravity of the massive MNBC financial crisis, a point that was predicted accurately by the former Coalition. To date, the MNBC debt continues to escalate and there has yet to be public disclosure for 2010-2011.

It begs the question, “What governing body in BC or Canada, other than the MNBC, would be permitted to function in a manner that is neither accountable nor transparent”?

Issue #3 – MNBC Debt Recovery Plan March 2011

The MNBC Debt Recovery Plan, dated March 2011 is filled with contradictions and misconceptions. Let’s review these examples:

a. Page 6 – “MNBC’s deficit is the result of inadequate management structures and practices…”

The validity of this statement needs to be questioned. Many of the current MNBC board have been involved with the MNBC for the last decade. In 2005, MNBC conducted extensive work to draft sound financial policies and procedures. In fact the current MNBC Vice President David Hodgson held the position of treasurer for the majority of the past decade. Furthermore Bruce Dumont and Dan Pope have also been board members since 2004.

b. Page 6 – “A communications strategy is also a central component… Our communications will include regular updates.”

MNBC has not provided any communication in the five month period since the release of their debt recovery plan.

c. Page 6 – “The objectives are allocated according to each of the three approaches; Administration, Governance, and Economic Development.”

MNBC internal reports provided to your respective governments by the BCMF two weeks ago revealed there has been minimal to no progress on economic development.

d. Page 7 – “Each month, MNBC will provide a brief synopsis of our progress to date, followed each quarter, by a more detailed outline.”

At present, the MNBC is five months into this process and has yet to provide a monthly synopsis or quarterly report.

It would appear that MNBC’s commitment to the debt recovery plan is lackadaisical at best.

Issue #4 – Dissemination of Information to Métis People

MNBC continues to present additional materials regarding the MNBC debt recovery on their website that is inaccurate. The MNBC Debt Recovery Plan “Q and A” section illustrates the efforts to elude the Métis people;

a. A 1 – The Métis Nation British Columbia (MNBC) 2010 Annual General Meeting accepted as presented …the financial statements for the year ended March 31st, 2010, which showed an accumulated deficit of $2.3 million.

This is factually incorrect as the MNBC debt as of March 31st, 2010 was $1.78 million. The fact that MNBC financial statements reported a number of 2.3 million suggests that the authenticity of MNBC accounting processes be called into question. Moreover, the publicly released financial position as of March 31st, 2011 is yet to be presented and MNBC has claimed that the MNBC debt has increased to $2.3 million – a little confusing in light of the publicly reported 2010 financial statements. This would imply that the debt did not increase in the 2010-2011 fiscal year which we know is untrue.

It is very important to note MNBC did not provide audited financial statements regarding the Métis school in 2009-2010 and did not include the outstanding property taxes as an identified liability for this fiscal year either. MNBC owed approximately $124,000.00 for 2010 property taxes and this has never been identified as a liability in the MNBC financial statements or any unaudited financial statements for the Métis School. As of August 5th, 2011 MNBC currently owes $235,380.14 in outstanding property taxes for 2010 and 2011. As such Métis people have not been provided accurate MNBC financial information regarding the total organizational debt for the past two years with respect to this example.

b. A2 – MNBC’s deficit is the result of … These issues having roots going back deep into a decade of silos and stovepipes between project management and administration.

The fact is the MNBC has carried a debt since 2000. However the MNBC has accumulated approximately $2 million of the debt over the last 36 months. MNBC did not accurately describe the fact that until 2008 MNBC was incrementally paying down their organizational debt first realized in 2000. The reader of such information could certainly be misled by the ambiguous statement.

c. A4 – …The process has been accountable and transparent from the start.

The MNBC‘s stated commitment of monthly debt recovery progress updates and detailed quarterly reports have not yet been fulfilled.

d. A 5 – The DRP process is a plan to get the MNBC out of debt through zero deficit management…

This appears to be inaccurate. According to the MNBC Debt Recovery Plan, MNBC is only trying to not increase the debt in the 2011-2012 fiscal year. The question remains, “How does MNBC propose to pay back the 2.3 million dollars in debt if the plan simply focuses on trying to not create further debt?”

e. A6 – The MNBC has revenue and equity and a solid Economic Development Strategy for generating revenue.

MNBC administers programs and services. There are no other economic development revenue sources and the use of such funds to secure the mortgage for the property and additional line of credit in 2009 for $3 million was extremely irresponsible and has now placed the MNBC in jeopardy to meet debt financing, infrastructure, and program cash flow requirements.

Closing

The four issues identified above illustrate the failure of the MNBC debt recovery process and the significant risk to the delivery of programs contracted by the MNBC for Métis people in BC. BCMF understands MNBC was provided additional resources from the federal government to develop the MNBC debt recovery plan. Quite honestly, the BCMF is shocked and confused regarding the lack of government action given the information presented to governments over the last few months. Why has there been no initiative on behalf of your respective departments for third party oversight when there is clearly a financial crisis further perpetuated by a lack of MNBC communication, no transparency and/or the fulfillment of reporting requirements?

BCMF continues to educate and inform Métis people about the severity of this situation. This is not about personalities or politics; it is about running a nonprofit corporation with open and transparent governance for the Métis people in BC. MNBC leaders and management appear to have forgotten their mandate and demonstrate this through their refusal to provide requested information, refusal to disclose financial facts, and by the utilization of government resources to maintain their offices until their term is done in September 2012. What will be left?

Meanwhile MNBC board members continue to draw salaries and expenses with the informed knowledge that this corporation does not have the funds necessary to cover these expenses. These costs have contributed to the deficit of $965,762.00 in administration in 2009-2010. The MNBC board admitted in February 2011 that the MNBC anticipated an additional administrative deficit of approximately $720,000.00 for 2010-2011, however yet to be confirmed by the audited financial statements. MNBC assured all Métis people in BC that the debt as of March 31st, 2011 was $2.3 million. MNBC has not disclosed any financial supporting information to substantiate this claim and BCMF is confident that the MNBC organizational deficit as of March 31st, 2011 will be higher. This will further display MNBC’s inability to be honest and transparent to their people. The BCMF assessment of the MNBC Debt Recovery Plan pointed out serious flaws in the MNBC statements but this is insignificant if MNBC has misled all Métis people and governments if MNBC has accumulated more debt than $2.3 million as of March 31st, 2011.

BCMF estimates MNBC board expenses to be $700,000.00 once again in 2010-2011 and furthermore that the MNBC board is carrying on with their monthly salaries and expenses at a consistent rate of about $58,000 per month for this fiscal year (April 1st, 2011 – March 31st, 2012). Based on the MNBC board’s refusal to reduce their costs, as evidenced in their dismissal of the MNBC Debt Recovery Action Plan Year One submitted by the former CCMC in February 2011, the MNBC could have saved over $600,000 within the first five (5) months of the current fiscal year if the proposed BCMF solutions had been adopted. One can only surmise as to why?

BCMF believes that the continued support of the MNBC must be addressed without further delay. The evidence, supported by facts, demonstrates that MNBC board members are incapable of managing this financial crisis and will continue to draw funds the MNBC does not have for personal gain. Therefore BCMF has prepared documentation and is scheduling a press conference in the near future given the lack of action by MNBC and the continued support of both the federal and provincial governments. Many of our Métis people in BC refuse to allow this situation to continue any further and as such the BCMF will proceed to take appropriate action to ensure that their voices are heard and that they receive the programs and services for which they are entitled.

Please feel free to contact me should you have any further questions. I can be reached at the BCMF head office number 1-604-638-7220 or by email directly @ k.henry@bcmetis.com.

Thank you,

Keith Henry

President

British Columbia Métis Federation

Suite 300-3665 Kingsway, Vancouver, BC V5R 5W2

cc

BCMF Board of Directors
BCMF Members
Mary Lou Kenney, Aboriginal Affairs and Northern Development Canada, Government of Canada
Rod Cunningham, Service Canada
Arlene Paton, Assistant Deputy Minister, Ministry of Aboriginal Relations and Reconciliation

Downloads:

Click here to download this letter in PDF format. Click here to download the MNBC 2008-2009 Board of Director Expenses Click here to download the MNBC 2009-2010 Board of Director Expenses Click here to download the MNBC Combined Statement of Operations page 75 – Excerpt from the 2009-2010 MNBC Annual Report Click here to download the MNBC Schedule of Expenses page 83 – Excerpt from the 2009-2010 MNBC Annual Report Click here to download the MNBC Debt Recovery Plan dated March 2011 Click here to download the MNBC Board Minutes dated June 7th, 2011 Click here to download the MNBC Debt Recovery Plan Q and A’s

 

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