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It’s sad to report, but the strategic leak of the Deloitte & Touche audit of Theresa Spence’s Attawapiskat band seems to have had its desired impact.

The leak has tarnished the reputation of a woman who has only been Chief since 2010 — the audit goes back to 2005 — and it has significantly distracted national attention from the fundamental issues at stake.

For example, a friend of mine — who, admittedly, has a busy life and may not follow these matters as closely as some — asked if the dressing down Deloitte and Touche gave Spence means the Attawapiskat Chief might actually be going to jail. Was she, perhaps, trying to commit suicide, this friend asked, to avoid a life behind bars?

It might sound like an oddly naïve question — but you have to remember that most Canadians are preoccupied with their own very full lives. Chief Spence’s fast and all the issues associated with it are only flickering media images on the outskirts of their awareness. And so, if you tell them a lurid story of what seems like improper handling of millions of (taxpayers) dollars, with no context and no background, they’ll naturally be impressed.

And, by the way, of the 409 transactions in Attawapiskat that Deloitte and Touche said lacked proper documentation, only about 30 were conducted on Spence’s watch — pretty small beer for the current band Chief, and nothing approaching any sort of scandal, let alone crime!

Sheila Fraser found a true scandal

But that’s not the real point. The real point is the way in which the system for providing First Nations services is fundamentally flawed.

When she was Auditor General, Sheila Fraser repeatedly warned that the management and funding system the Government imposes on First Nations would almost inevitably lead to problems of the sort Deloitte and Touche identified in Attawapiskat.

Fraser’s most recent damning report on the entire system came out in June of 2011.

It got some scattered media attention at the time, but was generally treated as “same old, same old” — not as the unmitigated scandal Fraser evidently thought it was.

In the fall of 2011, when Aboriginal Affairs officials went before the Commons Public Accounts Committee to answer to Fraser’s charges, no media — except for rabble.ca — thought that worthy of any coverage.

A leaked auditor’s letter to Chief Spence — dated last August and lacking any specific detail — gets breathless “CBC has obtained a copy” coverage.

A departmental response to a thoroughgoing critique of First Nations funding and services throughout Canada gets zero coverage.

Sadly, it seems the best way to get the mainstream media’s attention is to make them believe you’ve given them some kind of “scoop.” It sure worked for this week’s leaker.

The fact is, however, that the only way to make sense of the Attawapiskat audit is to read it in the context of what Fraser says about the whole system.

So, for those who missed it the first time, here are some of the former Auditor General’s key points.

What’s wrong with ‘contribution agreements?’

To start with, Sheila Fraser explains that the federal government uses those strange beasts called “contribution agreements” to fund the delivery of services on First Nations reserves, and then she bluntly states:

“We see several problems with the use of this funding mechanism for the provision of core government services.”

The first problem with the contribution agreement system is the lack of targets or expected outcomes, a basic feature of all sound administration.

“While the agreements state the services or actions to be provided, they do not always focus on service standards or results to be achieved.”

Then, there is the issue of gaps in funding, gaps which force First Nations to scramble and improvise.

“Most contribution agreements must be renewed yearly … we have found that the funds may not be available until several months into the period to be funded … Consequently, First Nations must often reallocate funds from elsewhere to continue meeting community service requirements.”

As well, Fraser notes that the agreements do not define who is responsible for what:

“The use of contribution agreements between the federal government and First Nations may also inhibit appropriate accountability to First Nations members. It is often unclear who is accountable to First Nations members for achieving improved outcomes or specific levels of services…”

‘A significant reporting burden for small First Nations’

And then Fraser gets to the nub of the problem that Deloitte describes (but fails to explain) in the Attawapiskat case.

That is the issue of the onerous and inappropriate level of paperwork, record-keeping and reporting imposed on First Nations — an issue Fraser raised with the Department of Aboriginal Affairs on numerous occasions, to no avail:

“Contribution agreements involve a significant reporting burden, especially for small First Nations with limited administrative capacity. Communities often have to use scarce administrative resources to respond to numerous reporting requirements stipulated in their agreements. We followed up on Aboriginal Affairs efforts to reduce the reporting requirements of First Nations and found progress to date to be unsatisfactory…”

‘Long-term planning difficult’

Fraser also underscores the constant financial insecurity to which the federally mandated system subjects First Nations:

“The use of contribution agreements to fund services for First Nations communities has also led to uncertainty about funding levels. Statutory programs such as land claim agreements must be fully funded, but this is not the case for services provided through contribution agreements. Accordingly, it is not certain whether funding levels provided to First Nations in one year will be available the following year. This situation creates a level of uncertainty for First Nations and makes long-term planning difficult…”

‘Lack of expertise for delivering key programs’

Finally, the former Auditor General points out the challenges that small and relatively poor First Nations communities face in providing complex services that, elsewhere in Canada, are provided by larger, well-resourced entities such as school boards:

“The federal government established each First Nation band as an autonomous entity and provides separate program funding to each. Many of these First Nations are small, consisting of communities that often have fewer than 500 residents. There are more than 600 First Nations across Canada. Many of them are hampered by the lack of expertise to meet the administrative requirements for delivering key programs within their reserves. They often do not have the benefit of school boards, health boards, or other regional bodies to support the First Nations as they provide services to community members.”

Tip of the iceberg

And that is just a small part of the Auditor General’s withering critique of abject federal government failure in the provision of basic services to First Nations.

It is a critique that Sheila Fraser repeated frequently throughout her tenure.

In her final report, on her way out in June 2011, Fraser came as close as a public servant can to throwing up her hands in despair and frustration.

She had to conclude that the federal government had failed, over a period of many years, to adequately deal with the vast majority of her recommendations.

Now, if there’s a scandal worthy of national media attention it is in what Canada’s Auditor General found, systemically and throughout the country; not in what Deloitte and Touche uncovered in one Northern Ontario community.

Anyone have a brown envelope?

Karl Nerenberg

Karl Nerenberg joined rabble in 2011 to cover news for the rest of us from Parliament Hill. Karl has been a journalist and filmmaker for over 25 years, including eight years as the producer of the CBC...