Making First Nations financial transparency fair

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A new Federal Court decision pauses Canada’s efforts to force First Nations to disclose private financial information. Aboriginal groups challenging the First Nations Financial Transparency Act (the “FNFTA”) won an important interim victory on October 23. The Federal Court agreed that Canada’s efforts to force a few First Nations to publish financial information – including private business information – should be stayed (put on hold) until a full legal hearing of whether or not the law is constitutional and valid takes place.

OKT LLP argued on behalf of the Athabasca Chipewyan First Nation, who have been public about their opposition to the FNFTA’s unfair requirements for making their private business information public. We are encouraged by this decision by the court agreeing with the submissions we made to put Canada’s application on hold until challenges to the FNFTA are addressed.

Controversial Legislation Leads to Duelling Lawsuits

The past government’s efforts to impose financial transparency requirements on First Nations have been controversial. The Harper Government passed the FNFTA over protests and objections from First Nations and Aboriginal organizations across the country. The FNFTA requires First Nations to prepare and publish their consolidated financial statements. The required disclosure includes information not only about funding received from Canada, but also about funds generated by First Nations’ own private businesses. The FNFTA requires this information to be published on the internet for the world to see, including non-Aboriginal business competitors that do not have the same financial disclosure requirements.

First Nations were not consulted about the legislation, and did not have the chance to make submissions about how the legislation could be improved.

When some First Nations did not comply with the FNFTA, the (former) Minister of Aboriginal Affairs responded with a number of threats and imposed sanctions. These sanctions started with withholding funds for to support band services and administration (including funds for employee benefits and salaries), and led to the federal government launching a legal proceeding in Federal Court in December 2014.

The federal government’s court application attempts to force compliance on the handful of First Nations that refused to publish the required financial information. The bands who are refusing to publish the information, and including some who had already had funds withheld by Canada, are Athabasca Chipewyan First Nation, Sawridge First Nation, Onion Lake Cree Nation, Ochapowace Indian Band, and Thunderchild First Nation. Most of these First Nations have extensive private business interests that stood to be significantly harmed by the financial disclosure requirements, which would affect economic development and independence of their communities.

The First Nations’ Motion to Put Canada’s Lawsuit on Hold

Before Canada’s legal application went ahead, two First Nations commenced their own lawsuit, suing Canada over the FNFTA and saying that the new legislation violates Aboriginal and treaty rights and is unconstitutional. Onion Lake Cree Nation and Sawridge First Nation brought motions asking the court to stay (or put a hold on) Canada’s legal application until their lawsuits are decided. The remaining three First Nations against whom Canada was seeking an order and legal sanctions also supported this request.

On October 23, Justice Barnes of the Federal Court agreed with the First Nations. His judgement found that Canada’s application should not be allowed to proceed until the First Nations’ legal actions are resolved. He found that ‘actions’ (or full legal hearings) are a better way to deal with issues and arguments about the Constitution and treaty rights, because this type of legal proceeding allows for more evidence, discovery and examination than an ‘application’.  Justice Barnes noted that Canada had lots of notice about the fact that the FNFTA was being challenged, given the very public opposition that has followed this Act since it was first introduced as a bill.

What Happens Next to the First Nations Financial Transparency Legislation?

Meanwhile, other First Nations complied with the FNFTA in 2013-2014. An analysis of the data for the 2013-2014 audit reports on First Nations’ expenditures for Chief and Councillor salaries, for instance, showed that the median total of salary and honorarium earned by chiefs, excluding travel expenses, was $60,000.

Onion Lake, and Sawridge can now pursue their legal challenges. They and the other First Nations argue that the current legislation puts their businesses at a competitive disadvantage by forcing them to reveal private business information about oil and gas and business revenues to the public at large.

It is possible, however, that the issues may be resolved by negotiations rather than expensive litigation. Prime Minister-designate Justin Trudeau stated that if elected, he will repeal the FNFTA in favour of working more cooperatively and respectfully with First Nations. With this decision to pause Canada’s legal sanctions coming days after the federal election, this is an opportunity to see how the new government will respond to the ongoing challenges to the FNFTA, and how the federal government can support rather than hinder economic development opportunities in First Nations.

By Cathy Guirguis