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Attawapiskat must pay Ottawa appointee $1,300 a day to run its finances

OTTAWA - The federal government is forcing the troubled Attawapiskat First Nation to pay a private-sector consultant about $1,300 a day to run its finances -- even though the government's own assessments say the third-party management system is not cost-effective.

Aboriginal Affairs officials told The Canadian Press they have an agreement to pay Jacques Marion of BDO Canada LLP a total of $180,000 to look after the reserve's accounts from now until June 30.

The money comes from the Attawapiskat First Nation's budget.

That rate over the course of a year would run up to $300,000 and easily pay for at least one nice, solid house, notes Mushkegowuk Grand Chief Stan Louttit.

"And (Aboriginal Affairs) should pay for this over and above First Nations existing budgets," he said.

Instead, the band will soon find itself cutting off educational assistants and aides for special-needs children in order to scrape together the money to pay the consultant, said New Democrat MP Charlie Angus, whose northern Ontario riding includes Attawapiskat.

"What they've done is taken $300,000 out of this band's limited budget for political cover to pay for the mistakes of an incompetent minister," Angus said. "They have to shut down programs to pay for this guy."

Marion's daily fee is about a month’s salary for educational assistants, he added.

But Prime Minister Stephen Harper brushed aside criticism of the fees and requests from the opposition to cover the costs. Harper told the House of Commons the government is just making sure the band council in Attawapiskat stops mismanaging taxpayers' money.

"We're investing ... additional hundreds of thousands of dollars in emergency services to make sure people are being taken care of," he said.

"The people of that community and the wider taxpayers of this country have an absolute right to ensure that that money is being used and being used effectively, and that is what we are doing."

The price tag is well within the going rate, say those familiar with third-party management of First Nations.

Assembly of First Nations officials say per-diem rates for third-party managers are between $1,000 and $3,000, plus expenses.

Stan Beardy -- the grand chief of Nishnawbe Aski Nation that includes Attawapiskat -- says communities in the James Bay region would normally have to pay $200,000 and $300,000 a year for such a government appointee.

The high pay removes incentives for third-party managers to resolve outstanding issues and leave, Beardy said.

"It's hard to get out of deficit that way," Oneida Chief Joel Abram added during a break in annual chiefs' meetings in Ottawa. "Maybe they (the federal government) should be in third-party management."

Per-diem rates vary widely to reflect the difficulty of the job at hand, said a spokeswoman for accounting firm KPMG. The firm does a lot of business with First Nations, but is not involved in the Attawapiskat contract.

Neither KPMG nor BDO would comment on specific rates, nor would Marion explain what he would do in return for the fees.

"We will not respond due to the confidential nature of our arrangements," Marion said in an email response to questions from The Canadian Press.

However, Aboriginal Affairs is now making some details public.

In a statement to The Canadian Press, the department said the appointee has been instructed to put the community’s health and safety first, and to continue financing all building projects that support that aim.

"The work of the third-party manager will support the department's first priority which is to address the community's immediate health-and-safety issues," said a note from departmental spokeswoman Genevieve Guibert.

Marion has been told to assess the need for housing, and then provide "safe, warm shelter" to anyone living in a temporary home, until other housing options are identified.

On Wednesday, Aboriginal Affairs Minister John Duncan wrote the band’s chief to say the government would consider evacuation or retrofitting the local arena and treatment centre for shelter until 15 new modular houses could be trucked in on the winter road.

Officials said Thursday the government will cover the cost of the evacuation, but were less clear about who would pay for the new houses, saying they would look to the third-party manager for information.

The appointee is also supposed to be working "on site," the department email says.

However, for now, Marion is not there because the band council sent him packing when he arrived on Monday.

Many third-party managers run their reserves' finances from another location, and Duncan has said Marion will operate that way if he's not allowed into Attawapiskat. Marion is based in Winnipeg.

Band Chief Theresa Spence has argued vigorously against intervention, saying it is an attempt to discredit her leadership during a housing crisis that requires immediate measures — and not the long-term accounting advice that generally comes from third-party management.

Aboriginal Affairs has three different levels of intervention when a band encounters financial trouble, and third-party management is for the very worst cases. The latest tally shows 12 bands are currently being run by government appointees.

Before now, Attawapiskat was already in the second-ranked arrangement, with the department "co-managing" band finances.

Third-party management is usually triggered by glaring financial irregularities or a default on payment, but can also be prompted by a threat to the health and safety of a band's inhabitants. That was the trigger in the case of Attiwapiskat.

The band has annual revenues of about $17 million, and a budget of about half a million dollars a year for housing.

A recent departmental review of the intervention regime concluded that the third-party management system is not cost-effective, and hurts a band's ability to govern itself.

"Considerable time and effort is required from (Aboriginal Affairs) and recipients to implement the intervention policy," says the November 2010 evaluation.

"The cost of co-managers and third-party managers affects the availability of band support funding for governance and administration in recipients."

The review points out that third-party managers are not able to use surpluses to pay off debt.

The review also said the arrangement is applied inconsistently across the country, making measurement of success or failure difficult. Some third-party arrangements drag on for up to 10 years, with no evident plan to graduate to a more independent financial arrangement.

The auditor general has also repeatedly criticized third-party management for not being properly monitored by the government.

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