SUMMARY OF RECOMMENDATIONS & THE WAY FORWARD

Hampton Inn Dartmouth Crossing, NS

February 20, 2014

FRAMEWORK

¢ Pink Larkin engaged MNP on behalf of the Shubenacadie Band to conduct a forensic investigation into the Band’s finances.

¢ These Recommendations have been developed jointly by Pink Larkin (legal counsel) and MNP for the Band’s consideration.

PURPOSE OF THE FORENSIC INVESTIGATION

(1)  To review the financial organization of Shubenacadie Band.

(2)  To analyze weaknesses and strengths of the financial structure of the Shubenacadie Band.

(3)  To determine if there are potential civil or criminal wrongdoings.

(4)  To make recommendations to Shubenacadie Band on how to improve financial accountability and management in the future.

OVERVIEW OF FINDINGS

(1)  Financial accountability was not generally present so as to ensure Council met its fiduciary duty to the Band members.

(2)  Practices were especially deficient in (1)  Tobacco, (2)  Fisheries, (3)  Housing, (4)  Gaming (5)  Operations.

OVERVIEW OF FINDINGS (CONT’D)

(3) Overall, governance of the Band by Council was lacking. Potential issues have arisen which call into question whether the Band Council met its fiduciary obligations and whether decisions were made in the best interest of all the Band members -- or, rather, whether the decisions were made in the best interests of certain Councillors and Band members.

OVERVIEW OF FINDINGS (CONT’D)

(4) Analysis of the financial records leave many unanswered questions which could potentially lead to criminal liability.

OVERVIEW OF RESULTS

(1) The report of MNP will be provided to the RCMP for review for potential criminal wrongdoing.

(2) The outcome of the RCMP investigation will be available to Council.

(3) Continue to pursue insurance claim.

REMINDER OF YOUR FIDUCIARY DUTY

(1)  All Councillors must act in the best interest of all of the Band members – not in their own self-interest.

(2)  Decisions must be made in response to #1 and not to further any political interest.

(3)  Council has a duty to ensure that previous mistakes are not repeated.

REMINDER OF YOUR FIDUCIARY DUTY (CONT’D)

(4) Council has a duty to ensure that money mismanagement in the past will not repeat.

(5) No more conflicts of interest.

IMPLICATIONS OF INACTION

1)  Knowing that inherent problems exist, and that recommendations to correct them have been made, naturally requires Band Council to deal with them immediately, deliberately, and responsively.

2)  Failure to deal with the concerns expressed is a breach of your fiduciary duty and makes everyone potentially liable if similar breaches occur in the future.

IMPLICATIONS OF INACTION (CONT’D)

3)  Failure to adequately address and implement the recommendations will be a significant loss of opportunity for Council and the Shubenacadie Band – an opportunity which will protect and enhance the Band for years to come.

4)  Recommendations must be implemented regardless of politics.

5)  Implementation of recommendations is left with Council, but the ultimate responsibility to the Band members remains Council’s.

6)  The Recommendations and this PowerPoint should be distributed to the Band members on the website for the purpose of community engagement.

RECOMMENDATIONS – POLICY BOARD

(1)   Conversion of Council to a Policy Board (September 1, 2014)

a)  Drafting of most relevant policies b)  Redrafting of current policies c)  Preparation of future policies to be drafted

POLICY AND GOVERNANCE

RECOMMENDATIONS – SHUBENACADIE ECONOMIC DEVELOPMENT CORP.

(2) Establishment of the Shubenacadie Economic Development Corp to oversee and manage the own-source revenue of the Shubenacadie Band. (a) Appointment of Board of Trustees (Jul 1)

(b) Appointment of Board of Directors (Sept 1) (c) BD hires CEO and Financial Director (Dec 1)

(2) Council develops the policy of the Shubenacadie Band of how the SED Corp will utilize its revenues:

a)  What types of businesses are acceptable and not acceptable;

i.  E.g., Acceptable – hotel, shopping malls ii.  E.g. Unacceptable – ?

b)  what percentage of revenue is returned to the band; c)  For what purposes; and d)  In what amounts.

PROPOSED BAND STRUCTURE

ECONOMIC DEVELOPMENT

GOVERNMENT SERVICES

RECOMMENDATIONS – COUNCIL MEETINGS (CONT’D)

(3) Council meetings need to be modified to adjust to the “policy” style of governance.

a)  Enhance the inclusion of Band members in the operation of Council.

i.  Live streaming of Council meetings ii.  Publication of Council agenda iii.  Reports to be tabled iv.  Early distribution of agenda by Chief to Council –

Thursday of the week previous to the meeting

RECOMMENDATIONS- COUNCIL MEETINGS (CONT’D) c)  Only items on the agenda can be discussed d)  No changes to any Policy of Council unless changed

in accordance with the Policy on Policies �  EXAMPLE: all changes of policies to be published on the

website for 30 days �  all changes of policy to be reviewed by policy sub-committee

in advance of meeting with report to Council 7 days in advance

�  All amendments to Policy require 75% vote (Or whatever Council decides)

RECOMMENDATIONS – COUNCIL MEETINGS (CONT’D)

e) Enhanced minute reporting – more effective recording of decision-making (not of all discussions)

f) Publication of minutes on website upon approval g) Proper on-site and off-site storage of minutes h) All video and audio recording of Council to be stored

on-site and off-site

RECOMMENDATIONS – COUNCIL MEETINGS (CONT’D)

i) BCR recording to be enhanced – and published j) Reduce the length of Council meetings k) Ensure that all Director and Managerial reports

required for a meeting are available for distribution with agenda

RECOMMENDATIONS – COUNCIL MEETINGS (CONT’D)

¢ Policy changes cannot occur upon election of a new Council except in accordance with the Policy on Policy Amendment

¢ Consider moving to a 3 or 4 year election cycle with a customary code or in accordance with the proposed First Nations Elections Act

GOVERNANCE RECOMMENDATIONS

¢ Development and enforcement of the Code of Ethics, including a Conflict of Interest Policy

¢ Recognition that the Chief and any Councillor can raise and seek enforcement of the conflict of interest rules or breaches of the Code of Ethics.

¢ Enhance the job descriptions of all employees of the Band.

GOVERNANCE RECOMMENDATIONS (CONT’D)

¢ Develop and oversee (stringently) a fraud-risk policy to protect against misuse of Band finances.

¢ Manage and oversee the financial affairs of the Government Services operations of the Band.

PROCUREMENT, PURCHASING & PAYMENTS - RECOMMENDATIONS

(1)  Develop policies which authorize the independent spending by managers and directors at established levels without prior approval. •  E.g., Manager - $5000 •  E.g., Directors - $10,000 •  But can be higher if in accordance with pre-

approved budget

PROCUREMENT, PURCHASING & PAYMENTS – RECOMMENDATIONS (CONT’D)

(2) All expenditures must be approved prior to payment by Director of Operations to ensure spending within the guidelines or in accordance with the budget, prior to oversight by Finance.

(3) Development of RFP process for large contracts in excess of X $

(4) Policy on Purchase Orders i.e., all goods / services must be purchased in

accordance with a PO.

PROCUREMENT, PURCHASING & PAYMENTS – RECOMMENDATIONS (CONT’D)

(5) Enhanced tracking system for all purchases of the Band from minor issues to major projects.

(6) Increased credit card security and control. (7) Increased cell phone security and control. (8) Enhanced tracking of personal loans and

savings

TOBACCO SHOP - RECOMMENDATIONS

(1)  Engage a consultant to revamp, from scratch, the entire operation of the Tobacco Shop and the sale of cigarettes through the Band.

(2)  Enhance security system from the ground up. (3)  Improve Point of Sale system. (4)  Integrate General Accounting System.

TOBACCO SHOP – RECOMMENDATIONS (CONT’D)

(5)  Improve daily reporting of sales and cash deposits.

(6)  Restrict “social grants” from the Tobacco Shop - these must follow an approved process.

CAPITAL & HOUSING - RECOMMENDATIONS

(1) Restructure the management of the operation: �  New Capital & Housing Senior Manager

¢  1) Capital Manager (New Housing & Infrastructure) ¢  2) Housing O&M Manager(Built Housing) ¢  3) Infrastructure O&M Manager (Built Infrastructure)

PROPOSED CAPITAL AND HOUSING STRUCTURE

CAPITAL & HOUSING – RECOMMENDATIONS (CONT’D)

(2) Retain expert consultant to revise and plan on the capital, housing and infrastructure needs of the Band for the next 25 years.

(3) Develop and publish policies on Band member entitlement to housing and responsibilities of Band member upon receipt of house

(4) Implement a fair system for the repair and maintenance of all Band-owned homes.

CAPITAL & HOUSING – RECOMMENDATIONS (CONT’D)

(5) Develop policy on rental properties which Band pays for, i.e., quality, rents

(6) Develop a tendering process for all capital, housing and infrastructure in accordance with the procurement policy

(7)  Enhance tracking of all expenses and repairs of all capital, housing and infrastructure

(8)  Establish central inventory of all housing stock and planned maintenance

WALLACE HILLS (SED CORP) - RECOMMENDATIONS

(1)  Conduct referendum on conversion of Wallace Hills to reservation

(2)  All of Wallace Hills development will be the responsibility of Shubenacadie Economic Development Corp

(3)  SED Corp to engage expert planners, developers and others to ensure maximum return

(4)  Consider land lease of properties in place of sales

CRANBERRY BOG (SED CORP) - RECOMMENDATIONS

(1) Consider re-establishing the program by Shubenacadie Economic Development Corp

FISHERIES (SED CORP) - RECOMMENDATIONS

(1)  Engage consultant to review the entire operations to ensure that Shubenacadie Band is maximizing its potential revenue and capacity-building opportunities

(2)  Utilize entire fish quota (3)  Utilize licenses within the Band when

economically feasible and when it ensures capacity-building

FISHERIES (SED CORP) RECOMMENDATIONS – CONT’D

(4) Have Shubenacadie Economic Development Corp develop a plan to purchase and maintain own fishing vessels

(5)  Better financial reporting and management of fish catch and financial payments

(6)  Have crew members become employees of the Captain, not the Band

FISHERIES (SED CORP) RECOMMENDATIONS – CONT’D

(7) Food, social, ceremonial fishery must be better managed.

GAMING (SED CORP) - RECOMMENDATIONS

(1)  Engage a gaming consultant to review and advise on the operation of VLTs, etc.

(2)  Is there an expansion available? (3)  Engage manager with experience who can

oversee the operation and protect the Band’s financial and community interests

(4)  Enhance relationship with ALC

GAMING (SED CORP) – RECOMMENDATIONS (CONT’D)

(5) Improve financial accountability to reduce penalties from ALC

(6) Develop with consultant long-term, fiscally responsible plan for gaming operation