Manitoba Hydro honours payments owing to First Nations impacted by Keeyask: report

Manitoba Hydro has properly reimbursed First Nations impacted by theKeeyask dam project to the tune of$169 million over15 years, but needs to do a better job of tracking when money changes hands,the province's auditor general says.

A reportfromManitoba Auditor GeneralNormRicardreleased Tuesday found that the utility is properly reimbursing First Nations impacted by the northern dam, but called for improvements to way funds are doled out.

The report starts out by notingManitoba Hydro projects can have negative impacts on First Nations.

Of that $169 million, Hydro said$146million in process costs and $17million for adverse effects was paid to Fox Lake Cree Nation, York Factor First Nation, War Lake First Nation andTataskweyak Cree Nation in northern Manitoba, according to the report.

Another $110 million is expected tobe paid out over the life of the project.

Proof of payment

The auditor general found the reimbursement policy currently in place doesn't require First Nations certify that costs incurred related to the project wereactually paid.

Hydro initiated independent audits of two First Nations involved in the project, in 2010 and 2014, after "financial irregularities" were noted.

The first audit found that one First Nation falsified invoices for reimbursement. The second audit confirmed another First Nation submittedtravel claims that weren't in compliance with reimbursement rules, according to the report.

The auditor general recommendsHydro require proof of payment for significant expenses incurred by First Nations with respect to the dam.

The auditor general also recommends Hydro conduct more regular risk assessmentsof each First Nation, which would include obtaining copies of invoices andreviewingaccounting records.

Adverse effects agreements

Adverse effectsagreements are tailored to each of the First Nations to offset the impact of dam operations and dictate how to move forward when budgets need to be revised.

Hydro told the auditor general that when it notices financial discrepancies from a First Nation, it follows up with the communityand updates cost projectionsaccordingly.

Thereport states that Hydro followed key measures in these agreements, but it alsofound the policy itself to be too blurry.

Hydro maintains that the ratification process is up to the First Nations to stay on top of, and alsoreportedly told the auditor general it has notreceived any complaints from First Nations about revised budgets.

But the auditor general said the Crown corporation needs to take greater steps to document and ensureFirst Nations havesigned off on budget changes.

"Given the magnitude of these payments and the impact of Hydro developments on First Nation communities, it is critical that adverse effects agreements be fairly negotiated and appropriately ratified by each impacted First Nations community, and that strong processes be in place to ensure expenditures are properly supported and used for the purposes intended," the report states.

Manitoba Hydro stated that it supports the recommendations of the report and believes the review ultimately shows "the strength of the policies and procedures in place for managing funding arrangements with First Nations."

"There is always room for improvement and the audit has provided important recommendations for Manitoba Hydro to address [and] enhance its policies.... Certain actions are already underway."

The Pallister government released a statement Tuesday said it welcomes the report but is disappointed "common sense practices of compliance" in the report's recommendations weren't already in place.

"We have full confidence our new board of Manitoba Hydro will take a common sense approach to prudent fiscal management and governance going forward, while working in the best interests of the ratepayers and all Manitobans to ensure the corporation's claim verification process is strengthened," Crown Services Minister Ron Schuler said in a statement.

Keeyask is located 725 kilometres northeast of Winnipeg on the Nelson River, and 30 kilometres west of the town ofGillam.