Crystal Semaganis, Leader of the Ghost Warrior Society, spoke to MPs on the government operations committee Oct. 16 as part of a study on Indigenous procurement.Supplied
Canadian Health Care Agency, a major government contractor for nurses in remote and Indigenous communities, saw a way to access a growing program for Indigenous-owned businesses despite not being one itself.
The Cambridge, Ont., company was able through a joint venture to be registered on the government’s Indigenous Business Directory and therefore could get contracts with limited competition. It struck a partnership more than a decade ago with a small, one-person foot-care company in Northern Ontario called Pedabun 35 Nursing Inc. That company was owned by Pearl Chilton, a Moose Factory-based First Nations nurse who had worked for CHCA in remote communities.
To participate in Ottawa’s Procurement Strategy for Indigenous Business – a decades-old program designed to steer government work to Indigenous-owned companies – the joint venture needed to be majority-controlled by Ms. Chilton’s foot-care company.
But a 2016 government audit found that Ms. Chilton had little say in the joint venture’s operations. Far from profiting from the arrangement, she was stuck with a $500,000 tax bill because of what one auditor described as “a serious misrepresentation” on the part of Canadian Health Care Agency and its then-owner.
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The arrangement between the two companies, and Ottawa’s continued awarding of business to Canadian Health Care Agency in the aftermath of the audit, is a case study in the problems with the Indigenous business strategy, critics of the system say. The program has faced heightened scrutiny after its connection to the ArriveCan app scandal and as the amount of money – and registered Indigenous businesses – has risen sharply in recent years. In ArriveCan’s case, Dalian Enterprises, a two-person company with an Indigenous owner, had a joint venture under the program with a much larger non-Indigenous company.
Video frame grab of Crystal Semaganis, Leader of the Ghost Warrior Society, who spoke to MPs on the government operations committee Oct. 16 as part of a study on Indigenous procurement.Supplied
Crystal Semaganis, who leads the Ghost Warrior Society, a group that researches First Nations, Métis and Inuit identity fraud, said in an interview that, under the current rules, the program encourages “David and Goliath” joint ventures in which small Indigenous companies are exploited by large non-Indigenous companies. “The current system is grossly inadequate,” she said.
She recently appeared before a parliamentary committee that is probing the program, which awarded $862-million in contracts in the 2022-23 fiscal year, up from $170-million five years prior.
The government should introduce monetary penalties for companies found to have breached the rules, Ms. Semaganis said, and the money raised from those fines should support genuine Indigenous vendors to build up their corporate capacity.
An October 19, 2016, e-mail from David Dobson, Ms. Chilton’s accountant, to NDP MP Charlie Angus’s office. The e-mail was later forwarded to a federal auditor.
She also said the department should have stopped contracting with CHCA after the audit. Indigenous Services Canada has awarded 30 contracts to CHCA since 2019-20, spending at least $131.7-million – and there is nothing in the rules prohibiting that since the contracts were not under the Indigenous business program.
In an e-mailed statement, Indigenous Services spokesperson Jacinthe Goulet said that, although the audit led to the company’s joint venture being removed from the directory at some point before 2019, that “does not preclude the Canadian Health Care Agency Ltd. from bidding on Government of Canada contracts that have not been set-aside for Indigenous businesses.”
CHCA, which was bought in 2022 by Quebec-based Premier Health of America, did not respond to multiple requests for comment. The company’s previous owner, Sharon Umana, who negotiated the joint venture with Ms. Chilton, declined to comment when reached by phone.
The arrangement between CHCA and Ms. Chilton, and the audit findings, are detailed in a 2017 federal court filing that the nursing company launched after the federal government concluded the joint venture was not an eligible Indigenous business. The company alleged the auditor and the department failed to present the company with an opportunity to respond to the facts and legal interpretations that led to the audit conclusions.
CHCA ultimately abandoned the court battle before a ruling was issued. The court records do not indicate if or how the dispute was resolved.
The records show that Ms. Umana led the company’s efforts to partner with Ms. Chilton. In a 2015 letter, she offered to help her manage the joint venture’s tax and legal obligations. “We both can make good money together,” Ms. Umana wrote.
A Nov. 30, 2016, e-mail from First Nations nurse Pearl Chilton to federal auditor Garry Hartle and then-CHCA president Sharon Umana.
But the two sides had a falling out when Ms. Chilton alleged she had been denied a control of the joint venture and cut out of the profits, documents filed in court show.
“I am not involved or consulted in day to day activities of the Joint Venture. Sharon and I have met on a handful of occasions, briefly and informally,” Ms. Chilton wrote in a November, 2016, e-mail to a federal auditor, adding that she does not believe the joint venture meets “the object and spirit of the Aboriginal Set Aside Program.”
David Dobson, Ms. Chilton’s Timmins-based accountant, wrote in letters submitted in court that his client had no business experience and was, in his opinion, taken advantage of by CHCA. Ms. Chilton was “promised a share of huge future profits,” but instead received a $500,000 bill for corporate and sales taxes, Mr. Dobson wrote.
“A government program appears to have been accessed for large amounts of money, under misleading representations, making Canada potentially a victim,” he wrote in a letter to NDP MP Charlie Angus’s office that was also forwarded in early December, 2016, to the federal auditor examining the issue.
In another letter later that month, auditor Garry Hartle told a senior program manager in the department that his review found Ms. Chilton was left with the tax bill because of “a serious misrepresentation on the part of Sharon Umana and CHCA,” to have Ms. Chilton sign an agreement.
“The de facto control has been assumed by Sharon Umana through her General Manager responsibilities,” the letter states. It also says Ms. Umana does not discuss any financial matters with Ms. Chilton prior to making decisions.
CHCA’s lawyer, James Rhodes, wrote a January, 2017, e-mail to the department auditor stating that “the principles of natural justice and procedural fairness were violated” in the audit process. “These violations are only made more egregious by the fact that several of the determinations made are both injurious and damaging as to the character and motives of Ms. Umana.”
Ms. Chilton did not respond to multiple requests for comment and her accountant, Mr. Dobson, declined comment.
Mr. Angus, the NDP MP who represents the Northern Ontario riding of Timmins-James Bay that includes Moose Factory, said he and his office heard Ms. Chilton’s issues and raised them with the Liberal government at the time, saying he was concerned that CHCA’s actions looked “extremely predatory.”
He said he was surprised to hear that CHCA has continued to receive numerous contracts after the negative audit finding.
“When I red flag something to them, I hope that they’re going to do absolute due diligence and make sure that justice is done,” he said. “If a whole series of other contracts were awarded after this, it raises questions about what were they thinking at the department?”
Jennifer Kozelj, press secretary to Indigenous Services Minister Patty Hajdu, said in an e-mail that the minister’s office will “conduct a thorough review of the correspondence and actions taken regarding any warnings or concerns raised” with respect to the CHCA joint venture.
“The Minister believes that policies must be continually assessed to ensure they serve the best interests of Indigenous communities,” she said. “Where there are legitimate reasons for concern, including negative audit findings, there must be accountability and transparency.”