FN chiefs say they were offered ‘finder’s fees’ to sign up their communities for bank loans

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The RCMP have reportedly been called in after two First Nation chiefs said they were offered “finder’s fees” to sign up their communities for Bank of Montreal loans in deals set up by a Winnipeg financial firm.

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Hey there, time traveller!
This article was published 21/01/2016 (2515 days ago), so information in it may no longer be current.

The RCMP have reportedly been called in after two First Nation chiefs said they were offered “finder’s fees” to sign up their communities for Bank of Montreal loans in deals set up by a Winnipeg financial firm.

In an internal company document, the Usand Group listed “favours” as part of a business strategy identified as a risk to be managed if word of them ever leaked.

That document circulated widely Thursday around the Winnipeg financial brokerage and its business dealings with First Nations.

One of the chiefs, Saskatchewan Carry the Kettle First Nation leader Barry Kennedy, confirmed to the Free Press Thursday he called the RCMP and the federal Indigenous and Northern Affairs Department to investigate what he called a “bribe” made to him by a Usand official trying to sign the band onto a $12.6-million loan.

“I’ve spoken to them (RCMP). I told them… I was offered some bribes,” Kennedy said by phone. “(The RCMP) are setting up an appointment with me, in conjunction with Indigenous Affairs, so I can sit down with all the evidence I have. We’ll proceed forward from there.”

In both cases, the chiefs claim senior officials with Usand offered to sign up their communities for loans in exchange for finder’s fees. Usand is a Winnipeg brokerage reported to hold more than $100 million in loans and business deals exclusively with First Nations.

Kennedy said he was offered $25,000 plus one per cent of the $12.6-million loan. “A one per cent finder’s fee,” he said.

Usand was started by Manitoba lawyer Sean McCoshen, described as a commercial lawyer and merchant banker in a glowing Canadian Business Journal feature that said he launched the brokerage in 2012 to fill a gap for “proper financing and investment solutions within Canada’s First Nations.” The company was born after extensive discussions with former national chief Ovide Mercredi, who remains listed on the company’s website as a senior adviser. Mercredi did not return a call Thursday.

The internal document, titled the Usand Group Risk-management Plan 2014, identified “kickbacks” as “any favour that might become publicized,” and advised there be “no written record of dealings, and to refer to them verbally in “vague language, i.e. offer to ‘give money back to the community to be used at their discretion.’ ” The plan called for “discussions prior to approval for any kickbacks. Try to utilize as a last resort,” it stated.

And if word of “kickbacks” leaked out? Use a “positive PR strategy. Head office may choose to put a moratorium on this technique.”

The company issued a statement Thursday evening that appeared to follow that strategy.

“The practices outlined in this APTN article are not condoned by Usand. This is simply not the way we do business,” the statement read.

The Aboriginal Peoples Television Network broke the story early Thursday, posting interviews with the Carry the Kettle chief and a Manitoba chief.

It also posted an audio recording between the Carry the Kettle chief and former senior Usand official John Miswagon, where finder’s fees were discussed.

In the audio, a man’s voice is heard describing a finder’s fee, to Kennedy. It’s the same $25,000 fee Kennedy told the Free Press he reported to the RCMP he was offered. Kennedy said he was the one who released the recording.

Kennedy said the voice on the audio is Miswagon, a former chief of the Pimicikamack Cree in Cross Lake.

The Usand statement Thursday evening said Miswagon did make the call as a “contractor” with Usand. “Mr. Miswagon has voluntarily withdrawn as a contractor with our company while this matter is under review,” Usand said.

Usand said the use of the word “kickbacks” in the risk-management document was a mistake.

“Unfortunately, an early draft of an internal risk-planning Usand document mistakenly uses the word ‘kickback,’ ” the statement said. “(It) refers to a common business practice of providing community support through donations or sponsorships,” Usand said.

Usand’s chief operating officer, Erinn Mah, offered to organize followup calls with McCoshen, Usand’s president. McCoshen did not return a call to his direct line earlier Thursday.

A second chief also came forward with similar claims of being offered a $100,000 finder’s fee to sign up his community for a multimillion-dollar loan, and after consulting elders and other band members, turned down the deal because “we don’t do deals that way.”

Meanwhile, the bank at the centre of it, Bank of Montreal, was also distancing itself from the brokerage Thursday.

“Our aboriginal banking group does not pay referral fees to these companies,” said an email statement from corporate BMO spokesman Ralph Marranca in Toronto.

“From time to time, our aboriginal banking group may receive referrals from companies such as Usand who act as representatives for their clients; however, our banking relationships are directly with our customers.”

“We hold ourselves to high standards of ethics and integrity and are committed to following fair business practices.

“BMO is proud of its long-standing relationship with the aboriginal community,” the bank’s statement said.

alexandra.paul@freepress.mb.ca

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