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Ottawa to create pool of third-party managers for financially troubled reserves

By Steve Rennie, The Canadian Press

OTTAWA - The federal government wants to be able to tap into a pool of pre-qualified candidates who can manage the affairs of financially troubled First Nations communities.

The call for third-party managers comes despite past criticism from the federal auditor general, the government's own internal evaluations and First Nations themselves about the idea of hiring outsiders to handle the finances of struggling bands.

A recent request for proposals says a list will be created of pre-qualified people or companies — grouped by language and location — who may be called upon to provide third-party management to First Nations communities.

"Services solicited under this request-for-proposal are for third-party funding agreement management, where a third-party funding agreement manager is appointed by Canada to administer the funding otherwise payable to the First Nation / Aboriginal community and preferably also to assist the recipient in developing its capacity for management of the funding agreement," the document says.

The Aboriginal Affairs Department website says 14 First Nations were under third-party management as of Nov. 1. That's down from 23 in 2010.

When a reserve is in default, Ottawa can appoint a third-party manager to administer all money that comes from funding agreements between the First Nation and the federal government. The First Nation's chief and council remain in place and they continue to manage any money that does not come from their funding agreements with Ottawa.

The First Nation can come out of third-party management once it presents and gets approval for a plan to balance its books and deal with other problems.

There have been criticisms of the system in the past, including by the federal auditor general who, in a November 2003 report, found a lack of openness and transparency around the selection process for third-party managers.

One of the more notable cases of third-party management was the Attawapiskat First Nation in northern Ontario.

Ottawa appointed a third-party manager after the First Nation declared a state of emergency in the fall of 2011 during a severe housing shortage.

The First Nation balked at the move, barred the third-party manager from the reserve and asked for a judicial review of the appointment.

In August 2012, the Federal Court agreed with the First Nation that it was "unreasonable" for Ottawa to have appointed a third-party manager under the circumstances.

"The decision to appoint did not respond in a reasonable way to the root of the problems at Attawapiskat nor to the remedies available upon default under the Comprehensive Funding Agreement," Justice Michael Phelan wrote in his decision.

Aboriginal Affairs and Northern Development has yet to respond to questions about the recent request for proposals.

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