Cash-strapped First Nation spent at least $4.4M on consulting firm controlled by Winnipeg developer

Peguis First Nation and a real estate business it created paid a company controlled by a Winnipeg developer at least $4.4 million over two years for consulting services, CBC News has learned.

The leaders of the cash-strapped Cree and Ojibway nation, which struggles with perennial flooding and the financial aftermath of high-interest loans, are now questioning the payments, which were approved under a previous chief and council.

Between April 5, 2021, and March 10, 2023, Peguis First Nation paid $3.8 million to a numbered company controlled by developer Andrew Marquess, according to a list of payments provided to CBC News by the band's chief and council.

Between Aug. 17, 2021, and March 29, 2022, the Peguis First Nation Real Estate Trust, a limited partnership with the stated goal of creating housing and engaging in off-reserve development, recorded at least $600,000 worth of payments to the same Marquess-controlled company, according to financial records obtained by CBC News.

Marquess is best known as the developer of the Parker lands in Winnipeg.

The payments to his consulting firm constitute "a significant amount of money" for Peguis First Nation, Chief Stan Bird said in an interview earlythis year.

Bird, who ran for office in 2023 on a promise to make Peguis governance more transparent, said the First Nation's finances are constrained by a $172-million lawsuit over outstanding loans, as well as the need to conduct hundreds of millions of dollars worth of flood recovery and mitigation work.

"Every major decision we're making, we take it to the community, where we're going to be accountable for the decisions that we make," Bird said.

"From this point forward, we have to be vigilant. We have to move slowly, cautiously. We have to do things right."

Peguis is Manitoba's most populous First Nation, with a total of 11,834 members, 3,723of whom live on reserve, according to federal population statistics.

Its reserve sits along the Fisher River in Manitoba's Interlake region, where the cumulative damage from floods in 2014, 2017 and 2022 has left Peguis with more than 500 homes in need of repair or replacement, Bird and his council said in April, when Peguis launched a $1-billion flood damages lawsuit against Canada, Manitoba and two rural municipalities.

As of that month, 785 Peguis members were unable to return to the community due to a housing shortage, Bird said.

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The lawsuit against Peguis over loans was launched in December 2022 by PwC, a court-appointed receiver for defunct lender Bridging Finance.

Bridging provided $99.5 million worth of loans to Peguis at a rate of prime plus 11 per cent in 2017.The average lending rate for a five-year mortgage in Canada was 3.8per cent that year, according to Statistics Canada.

The interest charges on the Bridging loans now total $72.6 million, according to PwC, which is trying to recover $172 million in principal and interest.

Marquess's consulting firm was asked by Peguis to help with both flood recovery and the Bridging Finance lawsuit when former chief Glenn Hudson led the First Nation.

The band also asked Marquess for advice about land and business development, according to a Marquess-authored report obtained by CBC News.

Marquess's company was paid a monthly average of nearly $158,000 for its work for the chief and council over 24 months, according to the provided list of payments totalling $3.8 million. The payments ranged in size from $20,526 to $345,000.

Peguis needed consultant's support: former chief

Hudson, Peguis's chief during the period when the payments to Marquess were made, initially declined CBC's request for comment, citing "a confidentiality agreement signed between parties at the band level."

In a subsequent Facebook message to CBC, Hudson said all Peguis council members, including two still serving, approved the payments.

"I have no comments as work was completed and finance looked after the payments," Hudson wrote in the message. "The CFO[chief financial officer] and finance are ones who process payments for works completed."

In an interview in July, Hudson said Marquess "has done great, good work for Peguis" at the same price other consultants charge.

"You need the professionals, you need consultants to gather the information, put together the reports," Hudson said.

"It costs money to do that. The government of Manitoba does it, [the]government of Canada and the City of Winnipeg. We're no different. As First Nations, you need that type of support."

Bird, who defeated Hudson in an election in April 2023, saidthe payments from Peguis to Marquess were stopped "as soon as I got into office." Bird said in an interview in January he did not believe the money was well spent.

Gregory Stevenson, a trustee for thePeguis real estate trust, said in an emailed statement in May that Marquess did valuable work for the trust but said he "really can't divulge any information" about payments made to any of the trust's vendors or consultants.

"As for working with Andrew Marquess, we have a solid relationship and the value he brings to our projects have proven successful," Stevenson said.

In a telephone interview in March, Marquess declined to discuss his work for Peguis, which he said was conducted on the basis of a contract approved by the former chief and council.

"I'm not discussing this in the media," he said, deferring to Chief Bird. "If he wants to discuss it in the media, that's up to him."

Four days later, a lawyer who works for Marquess wrote a letter to Peguis's chief and council, accusing the elected officials of providing confidential information to CBCand stating they are required to revealthe identity of CBC sources.

"Our client will seek to hold Peguis First Nation and each of you personally legally responsible for any damages that our client suffers as a result of the disclosure and/or publication of confidential information," Marquess lawyer Kevin Toyne wrote in the letter, provided to CBCby Peguis lawyer John Gailus.

Gailus said in a response that Peguis doesn't agree a list of payments constitutes confidential information.

"You may not be aware that Peguis First Nation is a public body that is responsible on an annual basis for producing audited financial statements which are required to be shared with their band members and with the government of Canada (and other funders)," Gailus told Toyne in an email.

Gailus also said Peguis is not aware of the identity of CBCsources.

In a separate email to CBCin May, Toyne said Marquess could not discuss payments from Peguis and its real estate trust because that information is the subject of confidential obligations that continue to apply to the consultant.

"Our client is therefore unable to participate in an interview at this time," Toyne said.

"He awaits the disclosure of the identity of the person(s) that have breached those confidential obligations when your story is published."

Provided flood recovery advice and more: consultant

According to the report Marquess provided Peguis's chief and council in May 2023, he and his company performed a wide range of duties for Peguis and its real estate trust.

"It has been a very positive relationship dealing with Peguis over the past three years. Many challenges were presented but throughout each of these instances my team and I always tried to put Peguis in the best possible position for success," Marquess wrote in that report.

"These roles were full time and our involvement with Peguis was virtually daily since the summer of 2020."

Marquess said in the report he was first approached to design and develop a financing plan for a seniors' centre for Peguis and provide a report about a Peguis cannabis investment on Warman Road in Winnipeg.

Marquess said in his report he was then asked to help Peguis contend with the financial fallout of the First Nation's association with Bridging Finance Inc.

Hehelped Peguis engage in negotiations with receiver PwC,helped seeklegal opinions and helped advise Peguisto service its Bridging-related debt if PwC accepted a settlement,Marquess said in his report.

PwCdid not confirm any writedown of Peguis's debt, Winnipeg accounting firm Baker Tilly stated in its documentation of the First Nation's 2022 financial statements.

Marquess said his work then expanded to other files, including efforts to help Peguis recover from repeated floods along the Fisher River.

Marquess said in his report he developed a plan to rebuild Peguis, handled 2022 flood-reimbursement claims and communicated with Indigenous Services Canada. He also said he proposed plans for housing, land drainage and flood mitigation.

"Our team created a three-bedroom and four-bedroom design for Peguis that had an enhanced elevation for each house so they didn't look like 'boxes' without curb appeal," Marquess wrote.

He also said in his report Peguis could launch a flood-damages lawsuit against the federal government, which the First Nation launched this year.

"Canada has known for years that Peguis is on a floodplain and has not provided monies to attempt to meaningfully floodproof the community," Marquess wrote in his report.

Marquess also said in his report he conducted consulting work for Peguis on files that included a joint venture with the Manitoba Jockey Club at Assiniboia Downs and the redevelopment of downtown Winnipeg's Portage Place mall. This took place more than a year before True North Real Estate Development took on the project.

Marquess also said in his report he consulted with Peguis on a potential transfer of the Aseneskak casino licence from Opaskwayak Cree Nation, near The Pas, to Assiniboia Downs in Winnipeg.

Marquess said he revised an arrangement withThe ReSolve Group, a Winnipeg company led by developer Joe Bova and property manager Gisele MacDonald, to develop a business plan for the licence transfer. ReSolve would have been paid $300,000 for the plan, plus $2 million if the licence transfer was successful, Marquess wrote.

"I know the principals at ReSolve. ReSolve does have the ability to assist Peguis with their request to the province in transferring the licence. ReSolve also has experience in managing construction projects," Marquess added, noting ReSolve wished to manage an ensuing casino project.

The provincial government has not approved any casino transfers, according to a statement from Manitoba Justice Minister Matt Wiebe, whose portfolio includes the responsibility for the Manitoba Liquor, Gaming and Cannabis Authority.

Peguis, however, has joined a consortium of First Nations that own Aseneskak Casino, according to the casino's website. The original members of the consortium were Cree nations located in northern Manitoba.

Marquess also said in his report he consulted on a series of projects for Peguis First Nation Real Estate Trust, which oversaw Peguis's purchase and sale of surplus provincial land along Wellington Crescent in Winnipeg.

The trust is also involved in efforts to transform the former Meadows golf course in East St. Paul into residential housing and build a daycare on the site, according to the report.

Marquess continues to provide advice to the trust, trustee Stevenson said in an interview in January, adding Marquess's contract with the trust was separate from Marquess's work for the band's chief and council.

'Internal politics': Marquess

In an interview in March, Marquess declined to address Bird's concerns about the payments to his consulting firm. Marquess said he said he briefed the new chief and council about the projects he was working on for the band.

"I'm not going to comment on any of the work I did. Peguis can give you all that information if they so choose," Marquess said.

"They certainly have all their own records. They have copies of everything," he said. "If they have a problem with that, they should be able to communicate what the problem is."

Bird said he has not talked to Marquess in person but has listened to Marquess pitch "his ideas around the Peguis First Nation Real Estate Trust, and the work that he's done for the community and the work that he can do for the community."

In a statement delivered to CBCby Toyne, Marquess said he had a positive working relationship with Peguis First Nation's former chief and council.

Marquess said his company provided Chief Bird and his council with "a complete summary of all work and projects to allow for a smooth transition from one government to another" and questioned Bird's motivation for commenting.

"It is unfortunate that internal politics is being brought forward by Chief Stan Bird related to other projects and previous contract work by 674 [6748831 Manitoba Inc., Marquess's company] given the recent public statements on these projects and on the activities of the former government and leadership group."

Former chief Hudson has asked the Federal Court of Canada to set aside his 2023 election loss to Bird, partly on the basis advance votes were nullified and cancelled. A special sitting of the court was held in Winnipeg on July 11 to hear arguments in a judicial review of the Peguis election.

The Federal Court has not yet issued a decision in the case. Marquess noted Hudson's legal challenge in a letter he sent to CBC News through Toyne.

Toyne also said in a statement in May that Peguis lawyer Gailus has not raised any concerns about those services.

Gailus said it's true he did not raise concerns.

"To date, we've been responding to his salvo threatening PFN[Peguis First Nation] with litigation for disclosing confidential information," Gailus said.

Peguis right to question payments: lawyer

For comparison's sake,CBCanalyzed spending on sole-sourcedconsultants by the City of Winnipeg.

The city has an annual budget nearly 11times larger than Peguis's, with Winnipeg's expenses for all public services in 2024 totalling$1.36 billion.

The most Winnipeg spent on a sole-sourced consulting firm over a recent two-year period, according to the latest available city records, was $1.9 million. That was paid to Deloitte, one of the world's largest consulting firms, for a trio of contracts with the city over 2021 and 2022.

Those contracts involved legal advice related to the city's police headquarters lawsuit, procurement model advice and cost estimates for some of the upgrades at a sewage treatment plant, and a report about improving City of Winnipeg staff recruitment.

Toyne, the lawyer for Marquess, said this comparison is misleading because "an entire team" was working under his client's direction.

Marquess would not say how many people his company employed to help deliver consulting services to Peguis.

Toyne said he would provide CBCwith further documentation to show the work his client has done. To date, CBC has not received the documentation.

Yvan Guy Larocque, a Mtis lawyer in Winnipeg who specializes in Indigenous economic development and governance, said he believes Peguis First Nation and its legal counsel are "asking the right questions" about the payments made to Marquess's consulting firm.

"It is absolutely necessary that the current council and Chief Bird and their legal counsel are asking questions about previous payments made to consultants, especially given the amount of issues the nation has faced," Larocque said in an interview in June.

"I think it's not only their prerogative, it's their duty to ask these questions."

Cash-strapped First Nation spent at least $4.4M on consulting firm controlled by Winnipeg developer

3 months ago

Duration 5:49

Peguis First Nation and a real estate business it created paid a company controlled by a Winnipeg developer at least $4.4 million over two years for consulting services, CBC News has learned.