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REPORTING · 20th September 2012
Merv Ritchie
In any courtroom, mediation or arbitration, the consultations employed by Deloitte and Touche during a preliminary review of the Gitxsan Treaty Society (GTS) finances would render the entire report worthless.

In some cases they accept one GTS director’s explanation for another’s inappropriate activities; this after inviting the GTS directors to private meetings to clarify inappropriate spending of GTS funds. Even more curious is how, after determining many of the alleged wrong doings were factual; they conclude a forensic audit is not necessary.

Deloitte and Touche discovered a memo written by Gordon Sebastion regarding Elmer Derrick and wrote;

“In a draft report of the Executive Director (Gordon Sebastian), dated December 29, 2011, a number of allegations regarding the actions and potential conflict of interest situations involving Elmer Derrick were identified. Gordon Sebastian indicated that he has obtained explanations from Elmer Derrick such that he no longer has these concerns regarding Elmer Derrick.”

Regarding funds considered double dipping by Beverley Percival the Auditors write;

It was alleged that Beverley Clifton Percival double dips with GTS wages and Vescor. Vescor was paid $286,250 during the two fiscal years ended March 31, 2009 and 2010. Vescor has apparently been doing work with GTS since 2001. According to Elmer Derrick, the entity is owned by Chief Don Ryan, who is the uncle of Beverley Clifton Percival. In addition, Elmer Derrick indicated that legal counsel was not happy with the work product.

Regarding Gordon Sebastian receiving $40,000 per year on top of his $105,000 salary with an average $40,000 expense statement (not including airfare) in 2009 and 2010 the Auditors write;

Given that Gordon Sebastian was the full-time Executive Director of GTS, and his employment agreement with GTS, dated June 12, 2003, states “A condition of your acceptance is that the current Legal Services Contract in place with the Gitxsan Treaty Society will effectively become null and void”, it is unclear why Gordon Sebastian would be paid additional monies for services rendered.

As for performing an actual audit the report clearly states this was not the intention of the entire exercise,

Our work does not constitute an audit as defined by the Canadian Institute of Chartered Accountants. Consequently, this assessment for a forensic audit and the resulting report do not constitute an auditor’s opinion nor do they represent such an opinion in any way.

In December 2012 the GTS offices were boarded up and secured by members of the Gitxsan Nation after Elmer Derrick performed a media scrum where he as “The Hereditary Chief” stated the Gitxsan Nation supported the Enbridge Northern Gateway Pipeline. The GTS had since 2008 been engaged in a lawsuit with Band Councils and numerous Hereditary Chiefs over their legitimacy. It was the Enbridge issue which tipped the patience of the majority of the Gitxsan people who came out in the hundreds to support those blocking access to the GTS offices.

After six months, after a judge declared the GTS was not operating legally, those securing the offices, now calling themselves the Gitxsan Unity Movement, agreed to open the doors as long as a full forensic audit of the books was completed. This did not happen and further the scope of the work requested of Deloitte and Touche, the firm hired by Indian and Northern Affairs Canada, now Aboriginal Affairs and Northern Development Canada (AANDC) was limited to one year and to specific allegations.

Our review and examination covered specific transaction areas for the period April 1, 2011 to May 31, 2012 (the “Review Period”) and was limited to the issues described in this report. This period was selected based on discussions with AANDC.

The report did go back a number of years when it came to certain issues such as excessive payments to the directors and others. Airline travel expenses, not identified to any specific director were an average of over $120,000 each year from 2009 to 2012. This was on top of the travel expenses reimbursed averaging well over $20,000 each. Extra payments to directors and GTS operated entities, including a whopping quarter of a million dollars ($245,262) to the Executive Director of the BC Mining Association Tex Enemark, added to the four year GTS expenditure of just under $20 million.

Gitxsan Forest Enterprises received over $2 million and Gitxsan Development Corporation (GDC), incorporated in June of 2011, received $1 million in 2012 alone. James (Jim) Angus is a director of GDC, (as well as most other GTS entitles) yet also received payments from the GTS in excess of $30,000 for each of the three preceding years.

One specified allegation was related as;

It was alleged that Gordon Sebastian hired a number of individuals without Board approval and paid them thousands of dollars.

The report then lists five people who received over tens of thousands of dollars and follows with;

As set out in the table above, there have been thousands of dollars spent on these individuals. It is not clear if the Board was aware of the costs but both Gordon Sebastian and Elmer Derrick were aware of these individuals and their involvement with GTS.

It is unclear what the Gitxsan Nation will do with these findings of wildly excessive spending but it is clear the firm whom the Gitxsan Unity Movement accepted to perform an audit of the operations from the beginning of the GTS (incorporated in 1994) were not given instructions to look any deeper than a quick review. Even though the allegations of mis-spending were found they accepted the explanations provided by the GTS directors during private undisclosed meetings, concluding no further investigation was warranted.

Residents of the Northwest will find one part of the report especially interesting regarding the highest paid person in 2012, this after the offices were blockaded. Danny Vaniez, the former owner of Repap, Skeena Cellulose, NWBC Pulp and Paper and New Skeena Forest, prior to the dissolution of the entire Northwest BC Forest Industry, received $80,000 as an eight month retainer. The report had this to say about Danny Vaniez;

DDV Enterprises LTD. is an entity apparently owed by Dan Veniez. Based on a review of the GTS electronic files, we identified the following payments to DDV Enterprises LTD. Fiscal year ended March 31 2012 $80,000

The billings are $10,000 per month on a monthly retainer basis. Per Elmer Derrick, Dan Veniez was brought in to deal with forestry issues.

By way of background, Elmer Derrick indicated that Veniez used to own a forestry company (based in Montreal), Veniez apparently ran into financial issues and sold a forest licence to a Chinese entity, Sun Wave. Subsequently, the forest licence was apparently obtained from Sun Wave and Elmer Derrick was involved in the negotiation. Gordon Sebastian indicated that GTS had an arrangement with Cam Stevens, Manager of Gitxsan Forest Enterprises (“GFEI”), such that GFEI would be hiring Mr. Veniez as a consultant on the forest license (387,000 m3 annually). However, Stevens needed time to get his finances in order therefore apparently requested GTS to begin paying Dan Veniez $10,000 per month so that GFEI would not lose the opportunity with Mr. Veniez. Mr. Stevens apparently agreed that GFEI would repay GTS for all expenditures related to Mr. Veniez. Gordon Sebastian indicated “Thus we (GTS) have reason to believe that all Mr. Veniez’s costs will be reimbursed.” The disbursements had not been reimbursed as at the time of our review, notwithstanding the $2.1 million of funding provided to GFEI identified in Table 5 above. If Gordon Sebastian is correct in his statement, then question arises as to why the amounts paid to Mr. Veniez by GTS could not have been paid from the funds provided by GTS to GFEI?

And as with all other descriptions regarding the most significant expenditures ie; Gordon Gibson, $230,000; Rick Connors (also CEO of GDC) $53,000 and Tex Enemark $250,000 Deloitte and Touché remark;

There was no contract on record and no documentation of authorization by the GTS Board for a contractual arrangement.

It is clear from the report and from copies of emails received earlier this year, Deloitte and Touche engaged in meetings with Gordon Sebastian, Bev Clifton Percival and Elmer Derrick without consulting or advising the Gitxsan Unity Movement or any others including the lawyers representing the Band Councils and Hereditary Chiefs, of these meetings. Neither did the firm request a meeting with representatives of those demanding the investigation.

These breeches of independence for a professional investigation to be considered truly fair and responsible, (requesting a clarification without advising the other parties in a dispute), renders the entire process invalid.

To find evidence during a cursory look which supports the allegations of misappropriations and then to conclude no further investigation is required is to bring ridicule to the entire process.

Ridicule is an understatement when the auditors accepted this as requiring no further investigation;

There was apparently $1.0 million dollars invested by GTS into [Black Goose Holdings] through a holding company that Elmer Derrick is apparently the sole trustee. Apparently, the investment is worthless due to the downturn in the natural gas industry.