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Hagwilget council sues former council members, trustees and auditor

BC Supreme Court civil claim alleges diversion of funds for personal use by former chief councillor
The administration building of the Hagwilget First Nation Government has been blockaded by band members since July 4. (Thom Barker photo.

The Hagwilget First Nation Government (HFNG) is suing the Nation’s former chief councillor, two unnamed persons, three former Hagwilget Trust village trustees, the former administrative trustee of the Trust and the Nation’s former auditor.

At issue is the handling of the Hagwilget Trust, a 2009 settlement agreement between Hagwilget and Canada for damages resulting from the destruction of an active Bulkley River fishery at Hagwilget Canyon in 1959. According to the agreement, $19 million of the $21.5 million settlement was to be put into a trust, revenue from which would be dispersed annually to the benefit of the Hagwilget Nation membership.

In 2011, the HFNG council set up the Hagwilget Rock Society to administer the annual income from the Trust with former chief councillor Dora Wilson and the late Peggy Underhill as the primary signatories. Following Underhill’s death in 2015, Vivian Joseph took over as the other primary signatory.

According to a civil claim filed in British Columbia Supreme Court Aug. 30, after elections in 2019, the new council under chief councillor Cynthia Joseph reviewed the operations of the Trust leading to the resignation of the Trust’s three village trustees, replacement of Royal Trust as the administrative trustee and replacement of Edmison Mehr Chartered Accountants as the HFNG’s auditor.

The current council then hired a national accountancy firm — referred to as the “National Firm” in the court document — to conduct an independent forensic audit. An earlier press release from the HFNG council following a blockade of the band’s administrative office named KPMG as the auditor.

In the claim, the current HFNG council alleges the audit unearthed “a number of questionable transactions in the financial records of the Rock Society.”

READ MORE: Hagwilget members blockade administration building; demand chief councillor’s resignation

The claim alleges Wilson and two other defendants referred to only as “John Doe” and “Jane Doe,” who were in positions of authority over the Trust, diverted significant portions from the annual income over the years for their own purposes.

Specifically, it says Wilson received hundreds of thousands of dollars in reimbursements for personal advances she allegedly made out of pocket for the furtherance of the purposes laid out in the Trust with insufficient documentary support and contrary to the term in the Trust that payments be made only to the HFNG council.

It also says she directed annual income to members of her family in the United States for private school tuition, travel expenses for a Mexican cruise and t-shirts for a Little League baseball team.

Among the other allegations are a $2,000 a month honoraria paid to Peggy Underhill for “oversight” of Trust projects with no documentation for Underhill’s qualifications or oversight activities.

Other persons named in the suit are Garry Underhill, Gordon Sebastian and Gail Lowry. As the village trustees, the HFNG alleges they failed to provide necessary oversight of disbursements.

The claim also seeks damages from Royal Trust for failing to provide oversight of the village trustees and not complying with the terms of the Trust agreement.

Finally, the Smithers Accounting firm Edmison Mehr is being sued for negligence and breach of contract for not evaluating the accuracy and reliability of the financial statements of the Trust, the Rock Society and the pre-2019 HFNG.

Joseph, the current chief councillor declined to elaborate on the amount of financial damages the current council is seeking saying the HFNG will make no further public comment while the proceedings are before the court.

She also declined to comment on whether a current blockade of the HFNG administrative building by some band members is related to the lawsuit.

However, the claim document suggests the blockade was a response to efforts by the National Firm to interview Wilson and other material witnesses.

“Within days of the requests for interviews being issued, a small number of members set up a blockade of the band office, precluding the current council and staff from providing services to members,” the document states.

The blockade has been ongoing since July 4. Blockade organizers are seeking Joseph’s resignation and new elections citing a laundry list of empty promises, neglect, abuse, bullying and lack of transparency by the current council.

The defendants had until Today (Sept. 20) to file their responses to the court.

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Thom Barker

About the Author: Thom Barker

After graduating with a geology degree from Carleton University and taking a detour through the high tech business, Thom started his journalism career as a fact-checker for a magazine in Ottawa in 2002.
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