A First Nations investment firm formed to help lift aboriginal people out of poverty has purchased Canwest Global's corporate jet for an undisclosed sum.
Tribal Councils Investment Group bought the Hawker Beechcraft 800A from Canwest in a fire sale of the media giant's assets -- a move that has raised the hackles of some chiefs.
But TCIG president and CEO Allan McLeod insists the purchase of a corporate jet will be a good investment.
"Some people will probably jump to conclusions (about the purchase of an executive jet)," he said. "But at the end of the day, this is a high-quality asset that we have bought at a good price that we will put to work to make us more money. That is how we expand distributions to our shareholders."
McLeod would not say how or why TCIG executives would use the plane, saying only Perimeter Airlines, which will operate it for TCIG, has had many calls from potential customers looking to lease it.
Mark Werhle, president of Perimeter, said, "It's a great opportunity for us to expand our charter business."
TCIG is also a significant investor in Perimeter's parent company, Exchange Income Corp., and TCIG earns fees by promoting and marketing Perimeter's services to First Nations. Exchange also owns Calm Air and Keewatin Airways. The three airlines serve virtually all the northern reserves and towns.
McLeod would not say if or when TCIG executives would use the plane.
Several chiefs expressed discomfort at the idea of an economic development firm that's meant to help First Nations people find self-sufficiency buying a corporate jet.
"I think all the eyebrows would be raised," said Chemawawin Chief Clarence Easter, who sat on the TCIG board until late last year.
Said Long Plain First Nation Chief David Meeches, "I haven't heard anything about a corporate jet, but let me tell you, if I bought a corporate jet I would sure be hearing about it from my community."
The optics of owning a corporate jet while TCIG's stakeholder bands struggle with some of the worst poverty levels in the country is not lost on some chiefs and other members of the aboriginal community in the province.
"Manitoba First Nations people should be proud of the financial success of TCIG, so it begs the question why many are not very fond of it all," said one executive familiar with aboriginal economic development issues in the province.
He said many are frustrated by the veil of secrecy surrounding TCIG and he said many people believe it is large enough now it could be doing a lot more to invest in local businesses at the community level.
For the last several years, about $100,000 a year in TCIG dividends has been parcelled out to the seven tribal councils. Some councils use the money for their operations. Others divide it up among the member bands.
Buffalo Point Chief John Thunder said he got about $11,000 one year before he pulled out of the tribal council altogether. He said TCIG and the tribal councils that run it amount to another level of bureaucracy that hinders the trickle-down of funds and investments to reserves.
Meeches, whose band also gets about $10,000 a year from TCIG, said he has asked for more direct information and reporting to the chiefs who make up the tribal councils that in turn govern TCIG.
But McLeod is quick to point out TCIG has paid out about $20 million in dividends over the last 20 years from an original investment of $25,000 from each of the seven tribal councils.
"Our shareholders are very happy with the return on their investments," he said. "To compare the return on investment of any individual band that has not made an investment is not fair."
Southern Grand Chief Morris Swan Shannacappo, who sits on the TCIG board, agreed, saying an annual return of $100,000 on a $25,000 initial investment is light-years better than most people get.
"ö Founded in 1990 with $175,000 -- $25,000 from seven tribal councils, including the Swampy Cree, Keewatin and Dakota Ojibway tribal councils. Its official vision statement is "to contribute to First Nations' self-sufficiency by generating wealth and being a major player in the Canadian and international economies."
"ö It does that by using long-term strategic investments that generate wealth and jobs.
"ö TCIG has invested in several Manitoba businesses, including Arctic Beverages, Exchange Income Corp. (owner of Perimeter Airlines, Calm Air and Keewatin Airways), Artis REIT and Precambrian Wholesale, which supplies a wide range of dry goods to independent retailers across the North.
"ö No financial information is publicly available. Even TCIG board members representing each of the tribal councils are told they cannot keep financial statements after briefings. Its website says TCIG has experienced "significant" growth over the last several years.
"ö CEO Allan McLeod said annual revenue has grown from $30 million three years ago to more than $100 million.
"ö The sale price of the 1988 Hawker Beechcraft 800A is a secret. But other models for sale across North America suggest the jet could be worth anywhere from $1.5 million to $2 million, depending on its condition.
"ö Staff from Carolina Corporate Jets, a Charlotte-based firm that brokers the sale of small aircraft, said there are about 47 Hawker 800As on the market with an average asking price of about $4 million, but that includes newer models.
"ö Two models from the mid-1980s recently sold for just shy of $2 million and Carolina Corporate Jets has a 1985 model available for $1.695 million.