OTTAWA — The RCMP is investigating the finances of a tiny B.C. First Nation band that were used to enrich members of a single family to the tune of $4.2 million over three-and-a-half years, according to a forensic audit obtained this week by Postmedia News.
The Shuswap First Nation’s transfers to the family, as well as additional funding for trips to Las Vegas and Cuba, ended in November of 2014 when the family was voted out of office following Postmedia’s disclosure of the family’s lavish salaries.
The federal government-funded Ernst & Young audit was provided in July to members of the band, which has an on-reserve population of about 100 on the outskirts of Invermere near the B.C.-Alberta border.
The 13-page report was also handed over to the Mounties.
“It is under RCMP investigation,” Chief Barbara Cote and her two councillors said in a recent written statement to band members.
Despite that ongoing police probe, the family member who received the largest portion of the $4.2 million during the 2011 to 2014 period is running in next month’s election to sit on council and potentially become Shuswap chief.
Candidate Dean Martin, son of former chief Paul Sam and former councillor Alice Sam (Paul Sam’s ex-wife), is one of the challengers going against the three-person incumbent council made up of Cote and councillors Tim Eugene and Rosalita Pascal.
Prior to the 2014 election Martin, who boasted in 2014 that his parents deserved to be paid more than Canada’s prime minister because they served their “nation” longer than any Canadian leader, was the chief executive officer of Kinbasket Development Corp., a band-owned corporation.
Martin, who could not be reached for comment, had received just under $1.4 million between April 2011 and November 2014, according to the Ernst & Young forensic audit that was funded, according to Cote, by Aboriginal Affairs and Northern Development Canada.
That amount, tax-free because Martin worked on-reserve, is the equivalent of roughly $2.5 million if he paid income taxes, according to the Canadian Taxpayers Federation.
His father Paul Sam, who was in his 80s and confined to a wheelchair, received $741,262, which is the equivalent of $1.3 million. His mother Alice, who served as band bookkeeper, got $690,481, or just over $1.2 million had she been living off reserve and paying income tax.
The forensic audit of all band finances, including revenues obtained from enterprises such as a golf club resort, forestry and real estate holdings, was the second audit funded by Ottawa.
An earlier Ernst & Young audit, completed in January, was focused only on money transferred to the band from the federal government. Postmedia was unable to obtain that audit.
There was “general and widespread lack of supporting documentation,” Ernst & Young concluded in the July forensic audit, noting inadequate proof that expenditures were reviewed to ascertain the business purpose of the transaction.
The audit, sent anonymously to Postmedia by a “concerned band member,” showed that two private companies — Shuswap Woodlands Restoration and KDC Sand & Gravel — received an additional $1.36 million in undocumented funds.
SWR is owned by Dean Martin’s son Robert, while KDC Sand & Gravel is owned by his other son Richard.
Another $66,481 was spent during this period “on flights to destinations such as Las Vegas, Chicago and Varadero, Cuba for travel of an apparent personal nature,” Ernst & Young stated.
It doesn’t state who took those trips.
The audit also discovered two $15,000 amounts that had been “diverted” from the band, one to pay off Dean Martin’s credit card and the other to pay off his son Richard’s card. Another $20,000 was diverted to pay down the line of credit of Pam Martin, Dean Martin’s former wife.
And $28,000 was diverted over that period to cover “travel and accommodations for a softball team.” (Family members include several avid current or former competitive baseball and softball players.)
Ernst & Young, which tried but failed to interview the Sams and Dean Martin, also found:
• Canfor forestry licence transfers to the band totalling $424,311 ended up in the coffers of companies owned by his two sons, with $200,000 going to KDCSG and the rest to SWR.
• While Martin’s actual contract stated that he receive $121,500 a year, his average salary was over $400,000.
• Cheques were “often” signed by the person receiving the proceeds.
• Bank accounts were opened outside the band’s accounting system, with $542,497 in band revenues being deposited with the Bank of Montreal and $105,000 with the Kootenay Savings Credit Union. “Significant” chunks of those deposits were later paid out to Sam-Martin family members.
Canadian Taxpayers Federation spokesman Jordan Bateman said Martin has an unfair advantage in trying to win back control of the band council in the Nov. 8 election.
“Mr. Martin has hundreds of thousands of dollars to spend on his campaign and to woo the very small Shuswap electorate,” Bateman said Friday.
“It’s unlikely any of his opponents have those kind of resources. Hopefully, voters get access to the full information about how their council has been run and change things.”
Bateman urged the RCMP to devote sufficient resources to complete a full investigation.
“Corruption in our political system — whether on or off reserve — can never be tolerated or overlooked, as integrity is foundational to democracy,” he said.
Shuswap members “deserve to know exactly what has gone on with their band leadership and millions of their dollars.”
Martin said after the 2014 election that he was removed from his job by the new council with police present.
“They came in with the RCMP … and verbally told me I was suspended pending an investigation,” he told the Windspeaker news agency, which serves Canada’s indigenous population.
Martin, in a separate Postmedia interview prior to that election, defended the $200,000-plus salaries paid to his parents even though, on an after-tax basis, they were higher at the time than then-prime minister Stephen Harper’s gross annual pay of around $330,000.
The salaries were also far in excess of Premier Christy Clark’s official remuneration, which was just under $200,000 at the time.
“With all due respect to Harper and to everybody else, I don’t think they’ve been in power for 34 straight years,” Martin said.
“To be … the leader of a nation, and we’re not just a band, we are a nation, and to lead it for 34 years, is something totally unheard of, I don’t care in what political field you’re in.”
Cote, who led the 2104 campaign to wrest control of the band from the Sam family, said at the time that members had only heard rumours of extravagant salaries and Las Vegas trips during those 34 years.
“We had no idea. We are absolutely disgusted,” she said then.
In an interview this week, Cote said the band — faced with considerable unpaid bills after the election — has been able to sharply reduce its debt and build cash reserves up to well over $2 million.
“We’ve had regular band meetings, we’ve been totally transparent,” she said, adding that the money that once flowed to the Sam-Martin family has been used to build new housing and to invest in new social services and band enterprises, including a gas station.
Cote, according to the band’s latest financial statement, earned an annual salary of $70,077. Councillor Pascal was paid $78,881 while Eugene received $67,577.
The salaries to the Sam-Martin family were only disclosed, and the Sam-Martin family ousted, following Postmedia’s disclosure of the band’s finances as reported under the First Nations Financial Transparency Act.
The Trudeau government is no longer enforcing that Conservative Party legislation, saying the law wasn’t brought in with adequate consultation with First Nations.
The band developed a number of business enterprises during the Sam-Martin family’s long tenure, including a golf course and hotel resort, as well as various real estate holdings.
Among the band’s contingent liabilities, according to its 2015-16 financial statements, is a $211,333 loan taken out by KDC Sand and Gravel.
The band is also involved in litigation with ex-employees, including Dean Martin, with claims against the band running just over $240,000.
