Health Canada - Virginia Fontaine Addictions Foundation Funding Report

September 24, 2003

Executive Summary

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This Executive Summary has been reviewed in accordance with the requirements of the privacy Act and information that can not be published has been severed. The severed portions of the text are identified by the following notation: 'Severed - Section 19(1) of the Access to Information Act.'

Table of Contents

• Introduction
• Audit
• Corporate Governance
• Source and Use of Funds
• Funding
• Relationship between Perry Fontaine, VFAF and Health Canada employees Paul Cochrane and Aline Dirks
• Occupancy
• Perry Fontaine
• Ken Courchene
• Animeke Consulting
• KAGF Consulting and Keith Fountaine
• Waboos Services and Randall Fontaine
• SJC Consulting
• October 2000 Cruise
• Healing our Spiritis
• New Zealand
• Questionable Transactions and Documentation after the October 2000 Cruise
• Other Disbursements

Introduction

Effective June 17, 1999, Virginia Fontaine Addictions Foundation Inc. ("VFAF") was incorporated as a non-share non-profit corporation. VFAF was to undertake and provide services for the treatment of First Nations adult alcohol and drug abuse and also the treatment of solvent abuse by First Nations youth. Specifically, the VFAF Policies and Procedures Manual indicates:

"The Virginia Fontaine Addictions Foundation Inc., operates "non-medical" residential facilities offering treatment for individuals suffering from any number of addictions, from alcohol and drugs to solvent abuse. The treatment will consist of structural group therapy sessions and individual counseling sessions designed to instill self-esteem, self-awareness, education and problem solving. Physical fitness programs will be incorporated into therapy to promote physical health. Native traditional teachings will be used to address the spiritual needs of those attending treatment. The teachings will show respect, honour, guidance and dignity."

Previously, the treatments for the above noted clients were performed under the auspices of two other corporations. The Virginia Fontaine Memorial Centre Inc. ("VFMC") provided treatment for First Nations adult alcohol and drug abuse clientele out of the buildings (the "Centre") located on the Fort Alexander Reserve. The Sagkeeng Solvent Treatment Centre Inc. ("SSTC") provided treatment for First Nations youth solvent abuse. This treatment was provided for the female youth from the Centre, and for the male youth, initially in trailers at VFAF and then later in facilities located at Seven Sisters in Manitoba.

Corporate Structure

The Directors and Officers of VFAF during the period of review follows:

Corporate Information Summary

Entity	Incorporation Date	Name		Title	Appointed	Resignation Letter
Virginia Fontaine Addictions Foundation Inc.	June 17, 1999	Directors
			Perry Fontaine, Chair	President	Jun 17/99
			Lana Daniels	Chief Financial Officer	Jun 17/99
			Keith Fontaine (brother of Perry Fontaine)	Secretary-Treasurer	Jun 17/99	Nov 30/00
			Phil Fontaine		Aug 14/00	Nov 23/00
			Murray Blacksmith		Aug 14/00
		Other
			Ken Courchene	Chief Executive Officer
			Vera Bruyere (daughter of Perry Fontaine)	Associate Chief Executive Officer

Health Canada Transfer Agreement

The takeover of these services by VFAF from VFMC and SSTC occurred effective October 1, 1999. However, the funding agreements between Health Canada and VFMC, and Health Canada and SSTC, remained in place until July 1, 2000 when a new agreement was entered into between Health Canada and VFAF.

The July 1, 2000 Agreement states:

"WHEREAS the Centre [VFAF] wishes to enter into a multi-year Agreement with Her Majesty for the transfer of control of Alcohol and Drug Abuse Treatment programs, and National Youth Solvent Abuse Treatment programs, and associated resources in order to enable the Centre to:

1. design and deliver alcohol, drug, and youth solvent abuse treatment programs, establish outreach and relapse prevention services, establish pre-treatment assessment services and post treatment follow-up services, and allocate funds according to the centre's health priorities subject to Section 6 of this Agreement.
   
   
2. strengthen and enhance the accountability of the Centre to community members."

Further, the Agreement at Sections 6 and 7 states that the funds were intended to support the provision of residential alcohol and drug abuse programs, and the provision of residential youth solvent treatment, pre-treatment assessment and post treatment follow-up services, and the community outreach program. The Centre may also use funds in this Agreement to provide preventative or complementary alcohol or drug abuse or solvent treatment services as long as certain occupancy rates were maintained within the Centre, and as long as the Centre operated within available resources.

At all material times during the period of review, Paul Cochrane, Assistant Deputy Minister ("ADM"), First Nations Inuit Health Branch ("FNIHB") was responsible for, and approved, all Health Canada funding to VFAF.

Throughout the period of review, Aline Dirks was the Executive Director to the then ADM FNIHB.

Audit

On October 18, 2000, the press reported that members of VFAF and Health Canada officials, including ADM Paul Cochrane, were on a cruise together in the Caribbean. On October 20, 2000, pursuant to the audit clause contained in the July 1, 2000 Transfer Agreement between Health Canada and VFAF, Health Canada advised VFAF that a forensic audit would be undertaken as a result of certain concerns. Health Canada initially retained Kroll Lindquist Avey (KLA) to conduct this forensic audit. In order to satisfy a request by VFAF, Health Canada agreed to hire a second audit firm selected by VFAF from a list of government approved suppliers. KPMG was selected from this list by VFAF.

The audit covers the period October 1, 1999, the date VFAF effectively began operations, to February 28, 2002.

'Severed - Section 19(1) of the Access to Information Act.'

This report is based on our review of the documents available to April 30, 2002 and the interviews conducted to date as described in this report. In the event that further documents or other information becomes available that could impact our findings, we reserve the right to review such records and reconsider and amend the findings set out in this report.

We conducted a two-phase clearance process to finalize this report, which included a review of the documents by certain named parties 'Severed - Section 19(1) of the Access to Information Act.'

Corporate Governance

Our review indicates Perry Fontaine was the principal decision-maker for VFAF and controlled the funds' flow from VFAF. The management culture was dominated by Perry Fontaine with virtually no checks or restraints placed on his actions by the Board of Directors or other management.

The only active members of the Board of VFAF were Perry Fontaine, Keith Fontaine and Lana Daniels. The Board, in essence, rubber-stamped Perry Fontaine's decisions. Perry Fontaine, Keith Fontaine and Lana Daniels all agreed that neither Keith Fontaine nor Lana Daniels were decision-makers. It would appear Board approval consisted of Perry Fontaine telling Lana Daniels and Keith Fontaine what was going to happen. Perry Fontaine made all major decisions and stated he believes people trusted his judgment.

Murray Blacksmith, who is listed as a Director, attended few meetings according to other Directors.

Phil Fontaine, who joined the Board on August 14, 2000, resigned on November 23, 2000, following the October 2000 cruise. Unlike other Board members, he was paid a $10,000 director's fee. His involvement largely related to discussions with VFAF and Health Canada about various issues that arose after the cruise. He did not attend or have any involvement in the cruise itself.

Without Perry Fontaine's approval no funds would flow from VFAF. He approved all significant payments and was involved in the detail of approving supplier payments. In general, the receipts and disbursements at VFAF appear to have been recorded, however backup and supporting documentation for many of the significant disbursements is lacking.

There is a significant difference between how the following consultants' contracts were treated as compared to third party suppliers:

Amounts Paid

	Amounts Paid
Animeke Consulting	$625,000
KAGF Consulting	$1,141,115
Waboos Consulting	$81,800

These consultants, on Perry Fontaine's instructions, were paid up front, provided no invoices and little or no evidence exists that they completed the services required under the contracts. These consultant contracts were managed, by his own admission, solely by Perry Fontaine.

In the case of KAGF, its principal Keith Fontaine, a brother of Perry Fontaine, has indicated he provided no services for many of the contracts and the funds flowed back to Perry Fontaine. In the case of Animeke, VFAF appears to have received little or no value for the $625,000 paid to Animeke. In addition, certain transactions entered into by VFAF with Perry Fontaine appear to lack business rationale.

The owner of Waboos Consulting is Randall Fontaine, who is the brother of Perry Fontaine. The value of services received from Waboos is questionable.

Source and Use of Funds

A summary of the VFAF source and use of funds during the period of our review, October 1, 1999 to February 28, 2002 follows:

Summary of Sources and Uses of Funds For the Period October 1, 1999 to February 28, 2002

Opening Balance - October 1, 1999 [1]			($13,023)
Apparent Sources of Funds:
	Health Canada Funding	$9,766,717
	Net Transfers in from Investment Accounts	1,511,688
	Known Deposits	662,332
	Education Funding from Sagkeeng First Nation	214,373
	Bingo Proceeds	91,009
	Province of Manitoba Funding	64,250
	Unknown Deposits	35,582
	Interest Income	16,642
	Other	14,039
Total Apparent Sources of Funds			$12,376,632
Apparent Uses of Funds:
	Cheque Disbursements	($9,262,945)
	Disbursements through Payroll Service	(2,893,118)
	Other Payments (Net) - Loans/Leases	(188,143)
	Bank Charges	(14,548)
	Other	(4,332)
Total Apparent Uses of Funds			($12,363,086)
Closing Bank Balance at February 28, 2002			$523

NOTES: [1] Summary prepared after eliminations of transfers amongst various VFAF bank accounts

Based on our review of the use of funds, we identified a number of transactions with entities or individuals, which raised concerns based on one or more of the following criteria:

1. Payments to or on behalf of members of the VFAF Board of Directors
2. Payments to or on behalf of VFAF Officers
3. No contracts to support payments
4. No invoices to support payments or level of effort
5. Little or no evidence of deliverables
6. Questionable business rationale for payments
7. Little or no apparent relevance to the stated purpose of VFAF
8. Inconsistent explanations provided by VFAF officials
9. Transactions involving Health Canada employees Paul Cochrane and Aline Dirks
10. Questionable documents used as support for explanations
11. Unusual transactions occurring after the October 2000 cruise

For each entity or individual of concern, we have accumulated and summarized all transactions identified during our review in the following table.

Entity or Individual	Amount
Perry Fontaine	$1,196,008
Ken Courchene	369,099
Animeke Consulting	625,000
KAGF Consulting and Keith Fontaine	1,141,115
Waboos Services and Randall Fontaine	81,800
March 2000 Cruise	95,845
October 2000 Cruise	135,015
Healing Our Spirits	92,182
New Zealand	154,176
Perry Fontaine and family and Paul Cochrane and family Concurrent Travel	71,459
Other Trips	167,269
Non-Travel Related Expenditures	359,385
Lana Daniels	138,876
Vera Bruyere	78,997
Levine Levene Tadman - Legal Counsel	235,539

A discussion of these transactions for each of these entities or individuals is contained within the various chapters of this report.

Funding

As discussed previously, VFAF took over the provision of services from VFMC and SSTC effective October 1, 1999. The funding agreements between Health Canada and each of VFMC and SSTC remained in place until July 1, 2000 when a new agreement was entered into between Health Canada and VFAF. The July 1, 2000 Agreement combined the levels of permanent funding provided previously to VFMC and SSTC ($6,819,132 per year) with an additional $55,000 per year for program support, for a five year period total funding of $34,370,660. In an amendment to the July 1, 2000 Agreement, dated September 1, 2000, VFAF was to be provided additional funding for: (i) operations ($210,000 per year); (ii) Role Model program ($160,000 in first year and $185,000 for year thereafter); and (iii) one time funding of $95,000 for additional operating; for total additional funding of $2,440,000. In addition to this yearly funding, the July 1, 2000 Agreement included an amount of $300,000 which was approved for the 2002 Healing Our Spirit Conference for each of the 2000/01, 2001/02 and 2002/03 fiscal years. Of this funding, Health Canada provided $9,766,717 to VFAF or its predecessors during the period October 1, 1999 to November 2000 under the various agreements with the following:

	Amount
VFMC	$2,877,467
SSTC	4,169,646
VFAF	2,662,720
Other	56,884
	$9,766,717

Funding under the July 1, 2000 Agreement and the September 1, 2000 Amendment included a number of amounts that were to flow from Health Canada through VFAF to third parties. Perry Fontaine identified seven such "flow through" arrangements.

In five of the arrangements, specific Health Canada funding could be identified. Total funding to be provided by Health Canada for these five arrangements was $2,362,586. Of this amount, VFAF received $837,586 during the period of our review. However, only $297,839 was expended by VFAF towards these arrangements, leaving $539,747 of funding which VFAF used for other items.

Relationship Between Perry Fontaine, VFAF and Health Canada Employees - Paul Cochrane and Aline Dirks

Treasury Board of Canada, in a document titled "Conflict of Interest and Post-Employment" indicates the following:

"Policy Statement

It is government policy to minimize the possibility of conflicts between the private interest and the Public Service duties of employees and to resolve any such conflicts in the public interest."

Two of the underlying principles in this document include:

"6. Every employee shall conform to the following principles:

• (a) Employees shall perform their official duties and arrange their private affairs in such a manner that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced.
• (b) Employees shall not solicit or accept transfers of economic benefits, other than incidental gifts, customary hospitality, or other benefits of nominal value, unless the transfer is pursuant to an enforceable contract or property right of the employee."

During our review, we became aware that Health Canada employees Paul Cochrane, ADM, and his Executive Director, Aline Dirks, had a relationship with Perry Fontaine, the Chair, President and directing mind of VFAF, that does not appear to be in accordance with the principles noted above. As noted, at all material times, Paul Cochrane was responsible for approving Health Canada funding to VFAF.

Paul Cochrane

During the period October 1999 to October 2000, VFAF paid for four trips where Perry Fontaine and Paul Cochrane and their families traveled together. These trips included trips to Florida, Caribbean cruises, Bermuda, San Juan and St. Maarten. The cost of these trips totaled $71,457 of which $38,343 was recorded as a receivable from Perry Fontaine as relating to Perry Fontaine and his family members. The cost related to Paul Cochrane and his family was $11,240 and none of this amount was recorded as owing to VFAF from Paul Cochrane.

In regards to the Florida trip, our review of VFAF records indicates that VFAF paid $5,763 for tickets for the Cochrane family to travel in late December 1999. Lucas Cochrane confirmed this trip was taken, that Perry Fontaine and his family were also in Florida, and that the families spent time together.

In addition to the trips discussed above, Perry Fontaine and Paul Cochrane, and their spouses, traveled together on two cruises organized by VFAF: one in March 2000 and one in October 2000. The amount, if any, paid by Paul Cochrane for the March 2000 cruise, which cost $9,288, is in question. An amount allegedly paid by Paul Cochrane for the October 2000 cruise was less than the actual cost of the cruise.

From 1998 to January 2001, VFAF or its predecessors paid $62,694 for four seasons tickets to the Ottawa Senators and selected concerts at the Corel Centre in Ottawa. Of these, $6,800 was recorded by VFAF after the October 2000 cruise as receivable from Perry Fontaine. Although in the name of Perry Fontaine, information obtained indicates that these tickets were "split" with Paul Cochrane, were delivered to Cochrane's house, and Paul Cochrane maintained control of the tickets. No amount was recorded by VFAF as owing from Paul Cochrane.

Lucas Cochrane, the son of Paul Cochrane, spent several summers working at VFAF or its predecessors. Lucas Cochrane confirmed that Perry Fontaine presented he and his girlfriend with an all-inclusive travel package to the Dominican Republic in 1998.

During February and March 2000, Lucas Cochrane was involved in the preparation of a proposal that ultimately resulted in a $600,000 one-time contribution from Health Canada to VFAF approved by his father, Paul Cochrane. Although documentation indicates ongoing discussions between Lucas Cochrane, his father, and Perry Fontaine about payment of consulting fees, Lucas Cochrane denies being paid for these services and we noted no payments from VFAF. Despite documentation to the contrary, Perry Fontaine states that he had no involvement with this proposal. He also stated that he did not pay Lucas Cochrane at any time.

Lucas Cochrane confirmed that he was given a 2000 Nissan Xterra by his parents upon his graduation from University in May 2000. Our review indicates that this vehicle was purchased new by Perry Fontaine in February 2000 and transferred to Lucas Cochrane in May 2000. Perry Fontaine indicates that he sold this and another vehicle to Paul Cochrane in return for two promissory notes totaling $50,000, neither of which has been repaid. Perry Fontaine declined to provide copies of the notes as he regards these transactions as personal. Paul Cochrane confirmed that he did purchase this vehicle from Perry Fontaine, but no further details were provided.

Perry Fontaine also stated that, unknown to Paul Cochrane, he had lent money to Paul Cochrane's wife, Joan 'Severed - Section 19(1) of the Access to Information Act.' He declined to indicate the amount as he again regarded this as a personal matter. As a response to this comment, Paul and Joan Cochrane wrote, as noted on the April 30, 2003 Gowlings letter to KPMG/KLA in response to our draft report, "Neither Paul nor Joan Cochrane are aware of what this issue is about. Without more detail or some documentation, they are unable to comment further."

There are indications Paul Cochrane drafted and Aline Dirks typed a series of VFAF resolutions and motions on September 28, 2000, while at VFAF. We note these resolutions, which include a resolution whereby Perry Fontaine was to receive "10% of the resources negotiated on behalf of the Foundation", appear to have been e-mailed to the home addresses of Paul Cochrane and Aline Dirks.

Aline Dirks

Aline Dirks and her spouse also attended the March and October 2000 cruises. No amount was paid by the Dirks' for the March 2000 cruise that cost $9,288. An amount paid by Aline Dirks for the October 2000 cruise was less than the actual cost of the cruise.

In addition, the aunt and uncle of Aline Dirks attended the March 2000 cruise at a cost of $5,803 to VFAF.

Occupancy

Our review of occupancy rates covers the period July 1, 2000 to September 8, 2000, when the Centre was closed for renovations and clients were sent home. VFAF took the position that client records prior to July 1, 2000 were not relevant as they felt these client records were not subject to the transfer agreement under this audit.

During the limited period of our review it appears VFAF generally met the occupancy requirements of the agreement between VFAF and Health Canada.

Alcohol and Drug Abuse Program

The July 1, 2000 Agreement between Health Canada and VFAF states:

"NNADAP

6.(1) Funds included in this Agreement are intended to support the provision of residential alcohol and drug abuse programs. For the duration of this Agreement, the Centre will be required to maintain a 75% occupancy rate, to be reviewed each year at the time of the annual review. The Centre may also use funds in this Agreement to provide preventative or complementary alcohol or drug abuse services as long as these occupancy rates are maintained, and as long as the Centre operates within available resources.

6.(2) For the purposes of this Agreement, the Centre agrees that a maximum bed occupancy over a twelve month period is to be calculated on the basis of 40 treatment beds for each days of the year in question. The yearly period is to be taken as starting on April 1st and ending on March 31st in any year that the Agreement is effective. On an annual basis NNADAP centres can cease operations for one month for staff training, annual vacations and maintenance."

The following chart depicts our analysis and findings related to occupancy for the Alcohol and Drug Program.

Alcohol & Drug Program - Patient Occupancy Rates

We note that the average occupancy rate for the Alcohol and Drug Program, for the period from July 1, 2002 to September 8, 2002, is 32.7 occupied beds, or an average of an 81.8% occupancy rate.

Solvent Abuse Program

The July 1, 2000 Agreement between Health Canada and VFAF states:

"NYSATP

7.(1) Funds included in this Agreement are intended to the provision of residential youth solvent treatment, pre-treatment assessment and post treatment follow-up services, and the community outreach program. For the duration of this Agreement, the Centre will be required to maintain a minimum of 80% occupancy rate. The Centre may also use funds in this Agreement to provide preventative or complementary solvent treatment services as long as these occupancy rates are maintained, and as long as the Centre operates within available resources."

7.(2) For the purposes of this Agreement, the centre agrees that maximum bed occupancy over a twelve month period is to be calculated on the basis of 36 treatment beds for each day of the year in question. The yearly period is to be taken as starting on April 1st and ending on March 31st in any year that the Agreement is effective. The number of days used to calculate the occupancy is less 14 days per years which are to be utilized for training."

The following chart depicts our analysis and findings related to occupancy for the Solvent Abuse Program.

Solvent Abuse Program - Patient Occupancy Rates

We note that the average occupancy rate for the Solvent Abuse Program, for the period from July 1, 2002 to September 8, 2002, is 30.4 occupied beds, or an average of an 84.5% occupancy rate.

Perry Fontaine

Various agreements and transactions were entered into between VFAF and Perry Fontaine. Given that Perry Fontaine was the decision-maker for VFAF, these agreements were effectively negotiated between Perry Fontaine and himself. The appropriateness of such agreements and transactions is questionable given the lack of any independent review or approval, the magnitude of the transactions and the apparent double payments by VFAF for Perry Fontaine's time.

During the period September 1999 to February 2002, VFAF provided at least $1,196,006 to Perry Fontaine through payments to him, or payments on his behalf. A summary of these is provided in the table below.

Amounts Provided

			Amount
Vacation Settlement			$661,500
Termination Payments			163,286
Honorarium
	Paid to P. Fontaine	$42,035
	Offset against Accounts Receivable- P. Fontaine	188,315
	Total Honorarium		230,350
Per diem Travel Expenses			41,563
VFAF Monthly Board Travel Allowances			63,000
Bingo Amountsoffset against Accounts Receivable- P. Fontaine			31,200
Miscellaneous Payments to Perry Fontaine			2,300
Net Amount Owing to VFAF as at April 2001			2,807
			$1,196,006

NOTE: Perry Fontaine and/or his company Ojibwe Anicinabe Gaagiidio Consultants (O.A.G. Consultants) also received at least another $308,000 of the Health Canada funding through payments from companies owned by Keith Fontaine. These companies were paid monies from VFAF, which were then paid to Perry Fontaine or his O.A.G. Consultants company (See Chapter 11 - KAGF Consulting and Keith Fontaine for details).

Vacation Settlement

An agreement was entered into on September 2, 1999, between VFAF and Perry Fontaine to pay him $661,500 in respect of an apparent loss of vacation time due to a policy change between VFMC and VFAF. The amount was supposed to relate to the loss to be incurred by Perry Fontaine for the next twenty (20) years, assuming that he would be working at VFAF for this length of time.

Perry Fontaine's vacation settlement was significantly higher than the other settlement arrangements he made with the various employees. Based on the calculation methodology provided by Perry Fontaine, and without comment as to the validity of the methodology, for the loss of future vacation entitlement, we calculated the amounts that would have been owing to certain of the employees receiving such payments.

Comparison of Vacation Settlement Amounts for VFAF Staff to Amounts Calculated Under Perry Fontaine's Methodology

Individual	$ Value of Future Entitlements[1]	Actual Vacation Settlement Amount
Perry Fontaine	582,750	661,500
Wendy Fontaine	417,334	40,000
Bernice Fontaine[2]	-	72,000
Marlene Fontaine	209,792	10,000
Ronald Guimond	26,662	36,400

NOTES:
[1] Entitlement based on Perry Fontaine calculation.
[2] At retirement age, so no future benefits can be awarded.

Termination Payments

Less than twenty-eight (28) days later, effective October 1, 1999, Perry Fontaine effectively terminated himself from VFAF, providing a two-year termination payment of $163,286 to himself. Given the timing, the parties to the agreement and the fact that Perry Fontaine was not going to be an employee of VFAF, it is difficult to comprehend why Perry Fontaine effectively paid himself $661,500 for the future loss of vacation entitlement.

Honorarium

Although terminating himself from VFAF and being paid as noted above, Perry Fontaine claimed a $750 per day honorarium for at least 299 days totaling $226,350 during the period October 1, 1999 to December 2000. This represented virtually all available days Perry Fontaine had to provide to VFAF. In addition, we note that his previous annual salary was $81,600, which would have equated to approximately $102,054 during the period Perry Fontaine was paid Board per diems totaling $226,350. $188,000 of this amount was offset against personal items paid by VFAF, including travel, jewelry, resorts, golf, furnishings and other miscellaneous items.

VFAF Board Travel Allowances and Diem Travel Expenses

Perry Fontaine also received a monthly travel allowance of $3,500 during the period October 1, 1999 to March 31, 2001 for a total of $63,000. This allowance was to cover "travel from time to time within the local area." Given that Perry Fontaine's position had been determined to be redundant, this expenditure is questionable. In addition, Perry Fontaine traveled extensively outside of the local area during this period for which he received per diems totaling $41,563.

Bingo Offset Against Accounts Receivable

Effective November 27, 2000, Perry Fontaine unilaterally changed the bingo policy from time off in lieu of working at the bingos to a policy where employees were able to be paid for bingo hours. This is unusual given that the bingos stopped as of March 31, 2000. The only two people to receive such credit for bingo hours were Perry Fontaine and Ken Courchene, with Perry Fontaine receiving a $31,200 credit against amounts he owed. These amounts owed included a December 1999 cruise by Perry Fontaine and his family, and a March 2000 cruise for Perry Fontaine and his wife and Paul Cochrane and his wife.

Ken Courchene

During the period October 1, 1999 to February 2002, VFAF provided at least $390,099 to Ken Courchene through:

• payments directly to him;
• payments on his behalf;
• provision of an asset to him; or
• payments to him through KAGF or Kinew Courier.

A summary of these amounts is provided in the table below.

Amounts Provided

	Amount
Salary	$45,769
Contractor and Bonus Arrangement	127,500
Evening Work	74,000
Holiday Pay	8,173
Bingo	15,200
Ceremonies & Cultural	39,800
Honorarium	22,375
VFAF Board Travel Allowances	12,000
Per Diem Travel Allowances	33,782
Other	11,500
TOTAL	$390,099

Effective April 2000, Ken Courchene resigned from VFAF as an employee and entered into a contractor arrangement with VFAF to provide CEO services at the rate of $85,000 annually. At the same time, Vera Bruyere, Perry Fontaine's daughter, was made Associate CEO. The CEO contractual payments to Ken Courchene were to be made in two lump sum amounts of $42,500 each. However, Ken Courchene received the equivalent of three such payments, for an extra $42,500 during this period. The additional $42,500 was apparently a bonus that Ken Courchene earned; the basis and period it related to were not provided. The last two payments totaling $42,500 were after the October 2000 cruise and occurred when the VFAF Center was closing down.

In addition, we noted two unusual payments to Ken Courchene after the October 2000 cruise. These included a three-year retroactive payment of $74,000 related, apparently, to evening overtime work and a further retroactive payment of $15,200 related to bingo hours. The payment of these additional amounts has the effect of paying Ken Courchene for virtually every night during the period of the retroactivity.

In addition, certain transactions entered into with Ken Courchene appear to lack business rationale.

Animeke Consulting

We noted payments totaling $625,000 to an entity called Animeke Consulting ("Animeke"), an entity owned by Julia Mandamin. We understand Julia Mandamin is married to Patrick Nottingham, the ex-Director, Health Programs, Transfer & Self-Government Initiatives, Manitoba Region, First Nations and Inuit Health Branch of Health Canada.

During our review process, Julia Mandamin indicated that Animeke received a total of $917,500 from VFAF or its predecessors between May 1998 and September 2000. These amounts are set out in the chart below:

Payments 1998 / 1999		Total	Description of Contracts
May14/98	$25,000		This funding was provided for consulting services and relates to the production of career guidance manual for disadvantaged youth, a career development resource guide for Aboriginal students, and a peer coaching resource manual.
Jul 21/98	25,000
Oct 28/98	44,000
Nov 03/98	25,000
Dec 22/98	25,000
Mar 27/99	25,000	$169,000
Jul 27/99	60,000	$60,000	This funding is for consulting services relating to the production of an Aboriginal Head Start Proposal for the Center and the production of a revised project for submission to First Nations and Inuit Health Branch.
1999 / 2000
May 7/99	$38,500		This funding provided for the development of a conflict resolution manual for use in the counseling program, and a set of guidelines for aboriginal literacy classroom, as well as research into the question of land ownership.
Jun 29/99	25,000	$63,500
Nov 20/99 (Less $30,000 for scholarship fund)	$280,000	*$250,000	To purchase the rights to all work produced in the past and in the future.
2000 / 2001
May14/00	$30,000	*$30,000	The repayment of a donation to a scholarship fund that was to be operational by April 1st, 2000. If the fund was not operating then the donation would be returned to the organization. It was not so the funds were returned
May19/00	$100,000	*$100,000	For the production of a resource handbook on living through the medicine wheel.
New Contract with Virginia Fontaine Addictions Foundation		*$245,000	To produce a language and instruction manual for youth and adults to use that will include language that will allow them to participate in ceremonies using the appropriate terms in the Anicinabe language.
Sep 01/00	$305,000**
Total		$917,500

* As previously noted above, we have observed these payments totalling $625,000 in the banking records
** The actual date of this contract is July 5, 2000.

When questioned about the contracts between Animeke and VFAF, Julia Mandamin could not provide basic contract information such as with whom she worked, to who she reported, or where she submitted the deliverables. Most explanations provided during her interview were inconsistent with other information obtained.

Perry Fontaine confirmed he was responsible for the management of the Animeke contracts. He indicated no competitive hiring process took place. Perry Fontaine indicated despite the fact he was responsible for the Animeke contracts he did not direct what was required under the contracts nor did he read the reports received. He was unable to explain, among other things, why VFAF paid Animeke $250,000 in November 1999, apparently to buy out an unwritten five year consulting contract, yet entered into two further consulting contracts totaling over $400,000 within seven months. He stated during our interview, "I was probably not doing my job."

Lana Daniels informed us that unlike other consultants, all Animeke cheques were given directly to Perry Fontaine at his specific direction. Further, although the business address of Animeke is Whitedog, Ontario, all cheques were deposited in Winnipeg.

We were provided with copies of certain deliverables relating to the Animeke contracts. A search we performed identified three published documents, which, with the exception of some differences related to page numbering, formatting, and other indicators, appear to be the same as those provided by Julia Mandamin as deliverables. These three Animeke deliverables correspond to contracts totaling $574,000.

Examples are provided below:

There would appear to be no sound reason for the payment of $917,500 to Animeke. The three deliverables noted above appear to be plagiarized and, the cost incurred by VFAF is in no way appropriate. No action appears to have been taken by VFAF as a result of the various reports allegedly received from Animeke. VFAF appears to have received little or no value for the $917,500 paid to Animeke.

KAGF Consulting and Keith Fontaine

During the period October 1, 1999 to February 28, 2002 we noted payments totaling $1,141,115 by VFAF to Keith Fontaine and/or an entity called KAGF Consulting ("KAGF"), which is registered to Keith Fontaine, the brother of Perry Fontaine. Keith Fontaine was also a director of VFAF for the majority of the period of our review. Perry Fontaine indicated he negotiated and managed the KAGF contracts on behalf of VFAF.

Amounts Provided

		Amount
One-Time Payments to KAGF
Consulting	$323,000
Real Estate	300,000	623,000
Maintenance Contracts		168,000
Consulting Contracts		165,000
Expense Reimbursements - Payments Made to KAGF		111,312
Expense Reimbursements - Payments Made to K. Fontaine		73,803
		$1,141,115

In addition, between September 1999 and April 2000, Health Canada paid $106,500 to KAGF to pay for the paving of the VFAF parking lot, which was done in July 1999. This paving was done by a Manitoba firm named Top It Paving and Materials Ltd. ("Top It"). Top It has confirmed they have received payment by wire transfer in July of 1999. We do not have access to the records of VFAF's predecessors to confirm if they paid Top It. Our review indicates that KAGF did not pay Top It. Keith Fontaine indicated that the $106,500 was paid out to Perry Fontaine as part of the pattern of funds flow outlined below.

The explanations provided to us by Perry Fontaine and Keith Fontaine and/or Ken Courchene about the payments above are at times inconsistent, and, in certain cases, there are significant inconsistencies between the explanations of Perry Fontaine and Keith Fontaine.

One-Time Payments to KAGF - $623,000

Summary of One-time Payments to KAGF Consulting

Description	Date	Cheque #	Payee	Amount
Unknown Payment	Mar 23, 2000	CH. 651	KAGF Consulting	$30,000
Coordination of Renovations	Apr 7, 2000	CH. 7126	KAGF Consulting	$100,000
Manaia & KAGS Contract	Jun 5, 2000	CH. 1039	KAGF Consulting	$118,000
Cultural Research Agreement	Sep 22, 2000	CH. 7126	KAGF Consulting	$75,000
Real Estate Transaction	May 19, 2000	CH. 980	KAGF Consulting	$100,000
Real Estate Transaction	Jun 5, 2000	CH. 1040	KAGF Consulting	$200,000
TOTAL				$623,000

Keith Fontaine provided copies of the banking documents of KAGF as support for his explanation of the funds flow related to the $623,000 one time payments made by VFAF to KAGF.

Keith Fontaine described a pattern where all one-time payments received by KAGF from VFAF, totaling $623,000 during the period of review, were ultimately flowed to Perry Fontaine. He also indicated from the monthly maintenance and consulting contracts totaling $23,000 monthly, $17,000 has been paid to Perry Fontaine in cash allegedly to pay third parties. Keith Fontaine stated this was accomplished either through Keith Fontaine converting the funds to cash and paying the cash to Perry Fontaine or through the direct payment using a KAGF/Kinew cheque to Perry Fontaine or an entity owned by Perry Fontaine called Ojibwe Anicinabe Gaagiidio Consultants Ltd. ("O.A.G. Consultants"). We observed KAGF cheques payable to Perry Fontaine and O.A.G. totaling $108,000 and $200,000 respectively.

Keith Fontaine has indicated that the payments, noted above, made by KAGF to Perry Fontaine or O.A.G. of $308,000 were made at Perry Fontaine's direction and that no services were provided to KAGF for these payments. In certain cases, Keith Fontaine has indicated there is Perry Fontaine's writing on the KAGF cheques. Keith Fontaine indicated that these direct cheque payments are part of the pattern of VFAF funds flowing through KAGF to Perry Fontaine, which Keith Fontaine understood at the time were to be for the benefit of VFAF.

We note that Keith Fontaine does not have specific documentation to support his description of the cash flow above, although, in specific cases, he was able to connect certain banking transactions to this pattern. In other cases, Keith Fontaine was unable to specifically show this pattern, but indicated it happened in each case and he stated that Perry Fontaine always got his money.

Keith Fontaine also indicated he or KAGF provided no services to VFAF for the $623,000 paid to KAGF, as noted above. He indicated he was not asked to provide services, rather he was told by Perry Fontaine that he was to pick up a VFAF cheque payable to KAGF at the VFAF office and, as he understood it, he was to cash the cheque and either give cash to Perry Fontaine or wait to be advised as to when and how the funds were to be paid to Perry Fontaine.

Keith Fontaine indicated that no contracts existed for the above $623,000 of VFAF payments when the payments were made. Keith Fontaine stated that he was asked in late 2000 or early 2001, by Perry Fontaine, to sign various contracts and documents supporting the above VFAF payments to KAGF. These documents were provided by VFAF management to KPMG/KLA in support of the payments made by VFAF.

Keith Fontaine stated that he did what was asked and that he thought the money given to Perry Fontaine was to be used for the benefit of VFAF. Keith Fontaine indicated he regarded the funds paid to Perry Fontaine as contingency funds of VFAF and he assumed that these matters were dealt with in the financial records of VFAF and during the annual audit.

Keith Fontaine observed that over the past few years, prior to the closure of VFAF, the frequency of these types of transactions had been increasing. He noted that in 1999 something changed and KAGF started getting additional monies over and above his monthly contracts, discussed below. He stated that at times he questioned himself as to why Perry Fontaine would need such large cash amounts, but he assumed that the annual external audit would have addressed these disbursements.

$30,000 - Unknown Payment

KAGF was paid $30,000 apparently for the preparation of a Smoking Proposal to Health Canada, according to Perry Fontaine. VFAF is unable to produce a copy of this proposal and Health Canada records make no mention of it. No contract or cheque requisition was provided. Keith Fontaine indicted KAGF did not prepare a smoking proposal and was not asked to provide any service for this payment.

A $30,000 VFAF cheque was paid to KAGF and within a month, Keith Fontaine indicated these funds were paid to Perry Fontaine by the way of a $30,000 KAGF cheque made payable to Keith Fontaine.

$100,000 - Co-ordination of Renovations

KAGF was paid $100,000 "up front" to apparently oversee renovations at VFAF, according to Perry Fontaine. No contract or invoice was provided to support what was done. According to Perry Fontaine, this contract was not completed and KAGF repaid $25,000 to VFAF. No evidence of this repayment was identified during our review. Keith Fontaine indicates he coordinated the renovations, but did so under his monthly contract. No services were requested or rendered for the $100,000 payment according to Keith Fontaine.

A VFAF cheque, in the amount of $100,000, payable to KAGF was deposited to KAGF's bank account the same day. Keith Fontaine indicated that he paid these funds to Perry Fontaine in cash through a KAGF cheque for $100,000, dated 5 days later, made payable to Keith Fontaine.

$118,000 - Manaia & KAGS Contract

KAGF was paid $118,000 to provide "cultural consulting services". We were informed by Perry Fontaine that this contract was a "flow through" contract, whereby KAGF received an $18,000 administration fee. Perry Fontaine's explanation for "flowing" the contract through KAGF was to give Keith Fontaine international experience. According to Perry Fontaine, the balance of the funding ($100,000) was paid to himself by KAGF, from which Perry Fontaine indicated he paid $88,930 in cash to a sub-contractor, Manaia Connections ("Manaia") for services and expenses. Perry Fontaine indicated the balance of the funding ($11,070) was used by him to pay September 2000 Pow Wow expenses. Lana Daniels indicated she was unaware of this and it was not included in the accounting for the September 2000 Pow Wow provided to us.

A VFAF cheque in the amount of $118,000, was deposited to the KAGF bank account on June 9, 2000. Keith Fontaine indicated that these funds were paid out through various means including KAGF cheques totaling $80,000 which were converted to cash and paid by himself to Perry Fontaine. Keith Fontaine stated he was not exactly sure specifically how the remainder of the funds were paid out as there were large amounts of money flowing from VFAF to KAGF during that time including the $118,000 above and another $300,000 related to the alleged real estate deal discussed below

Keith Fontaine stated that he did not know what these funds were for when he received them, KAGF rendered no service and he had no business relationship with Manaia. He stated he signed the April 1, 1999 agreement in late 2000.

$75,000 - Cultural Research Agreement

KAGF was paid $75,000 from VFAF apparently to conduct cultural research, which, according to Perry Fontaine, was to develop a library of Elders' stories. Keith Fontaine stated that he was not aware of any services required for these funds and KAGF did not perform any cultural research. Keith Fontaine has indicated that both the deliverables and the contract were signed by him in 2001. According to Perry Fontaine, this contract was not completed and KAGF repaid $25,000 to VFAF. No evidence of this repayment was uncovered during our review.

A VFAF cheque in the amount of $75,000, payable to KAGF was deposited to the Kinew Courier bank account. Keith Fontaine indicated that he made the decision to deposit these funds to the Kinew account in order to show some activity in this account. Keith Fontaine indicated that, at the direction of Perry Fontaine, he paid these funds in cash to Perry Fontaine through a Kinew Courier cheque in the amount of $75,000, made payable to cash.

$100,000 and $200,000 - Real Estate Transaction

KAGF was paid a total of $300,000 in May and June 2000, apparently related to a real estate transaction. Various documents indicate VFAF entered into a letter of intent with KAGF to acquire a facility that would serve as the basis of operating an aftercare program. A subsequent bill of sale indicates that the property selected was to be purchased from Perry Fontaine. The apparent purchase and sale agreement was subsequently cancelled and, in January 2001, KAGF repaid $293,722 to VFAF.

A VFAF cheque in the amount of $100,000, was deposited to the KAGF bank account on May 24, 2000. A VFAF cheque, in the amount of $200,000, was deposited to the KAGF bank account on June 9, 2000.

Keith Fontaine indicated he did not know what the $100,000 and $200,000 were for when he received them and did not ask why. He stated there were no consulting services requested or provided. Keith Fontaine also indicated that a total of $418,000 in VFAF cheques (including the $118,000 above and the $100,000 and $200,000 related to the apparent real estate transaction) was deposited to the Peace Hills account of KAGF between May 24, 2000 and June 9, 2000. Keith Fontaine stated that the money flowed to Perry Fontaine in cash or through direct cheques, but he was unsure of the exact related payments.

There are significant inconsistencies between the documents provided about the alleged real estate transaction, Perry Fontaine's explanation, Keith Fontaine's explanation, and the recollections of Ken Courchene and Lana Daniels noted in the following:

• Perry Fontaine indicated that a real estate transaction had taken place as set out in the documents.
• Ken Courchene indicated that he was unaware of any real estate transaction at the time it was apparently taking place, but that following the October 2000 cruise, he was asked to sign various documents purportedly authenticating it.
• Lana Daniels indicated she was unaware of any real estate transaction at the time it was apparently taking place. Lana Daniels indicated that when the VFAF cheques in the amounts of $100,000 and $200,000 were prepared, she understood there to be, and she believes she was provided with, a consulting agreement between KAGF and VFAF for $300,000. She further indicated that, after the October 2000 cruise, she was asked to put copies of all consulting agreements in an envelope and put this envelope under Perry Fontaine's office door. Lana Daniels indicated that several days later she was given back certain contracts that were in different type and had certain additions. She believes the $300,000 consulting contract was replaced with the real estate documents provided to us during our review.
• Keith Fontaine indicated that there was never a real estate deal, nor intent to open an aftercare program that he or KAGF were involved in. The idea of an aftercare centre was mentioned but nothing further was done to move the matter forward. Keith Fontaine indicated the real estate documents were signed in late December 2000 at the request of Perry Fontaine.

Maintenance Agreements - $168,000

VFAF, through maintenance contracts, paid KAGF $168,000 or an average of $12,444 per month over the period of October 1, 1999 to November 15, 2000 for maintenance services. Perry Fontaine informed us that the above maintenance contracts were taken over by KAGF from Waboos 'Severed - Section 19(1) of the Access to Information Act.' Perry Fontaine explained, at one point, that no work was actually performed for these contracts. Instead, the monies were used to pay KAGF an administration fee, cover Randall Fontaine's "notional" lease payments, and the remaining funds represented Randall Fontaine's unused sick and holiday pay from earlier years worked. Perry Fontaine also stated, that the services provided were as stated, however, Keith Fontaine got an administration fee and used Randall Fontaine's equipment. (Please see Chapter on Waboos for a more detailed discussion of this matter). Keith Fontaine indicated he received $12,000 (2 x $6,000) a month from VFAF under this contract, of which he received $2,000 (2 x $1,000) for doing what had been required under the Waboos contract. Keith Fontaine stated that the other $10,000 was paid in cash to Perry Fontaine, and that Perry Fontaine told Keith Fontaine that the $10,000 was held in trust for Randall Fontaine. While certain of the services appear to have been performed by KAGF, it is difficult to confirm value for money in relation to this monthly contract, given these different explanations.

Consulting Agreements - $165,000

In addition, KAGF was paid $165,000 or $11,000 per month for the same period (October 1, 1999 to October 31, 2000) for consulting services. According to Perry Fontaine, under this contract, KAGF paid $4,000 to $5,000 of VFAF expenses each month at Perry Fontaine's direction. Keith Fontaine indicated the $11,000 monthly amount was split: $4,000 to himself, $6,250 to Ray Lavallee and $750 to Bertha Girard. Keith Fontaine indicated he paid the amount of $7,000 to Perry Fontaine in cash, which he understood was split as described above but could not confirm, although he obtained receipts from the parties in late 2000 at Perry Fontaine's request. He paid Perry Fontaine, who he assumed, paid the others. Perry Fontaine indicated that despite the duties set out in the contract, Keith Fontaine's real role was to act as "his secret agent man", to be Perry Fontaine's eyes and ears as to what was happening around VFAF. It is difficult to confirm value for money given these explanations.

Waboos Services and Randall Fontaine

We identified numerous payments totaling $81,800 paid to Randall Fontaine, and an entity operated by Randall Fontaine called Waboos Services ("Waboos"). Randall Fontaine is the brother of Perry and Keith Fontaine. Perry Fontaine indicated he negotiated and managed these contracts on behalf of VFAF.

The explanations provided by Perry Fontaine for these payments to Waboos are inconsistent. For certain of these payments, no contracts or invoices were provided detailing specific services extended or providing any indication of type or level of service.

According to the documents provided, a $20,000 amount was paid on November 27, 2000 to Randall Fontaine for loss of future holiday pay more than a year after similar payments to certain other employees. It does not appear Randall Fontaine had been an employee of VFAF since 1994.

SJC Consulting

We understand that SJC Consulting ("SJC") is owned by Steve Courchene, a former Director of SSTC.

During the period of our review, October 1, 1999 to February 28, 2002, no payments were made to SJC or Steve Courchene. However, our review of computer hard drives and servers uncovered a series of apparent contracts with SJC Consulting prior to October 1, 1999, that range as high as $50,000 per month. We do not have access to the banking records relating to the apparent SJC contracts detailed and, accordingly, cannot comment on what, if any, payments were made under these contracts.

Perry Fontaine indicated that SJC had an understanding with him, whereby SJC had an ongoing contract for the five-year length of a particular Health Canada agreement. Perry Fontaine stated a falling out between himself and Steve Courchene took place in 1998 when a new transfer agreement was being negotiated.

Lana Daniels advised that a monthly payment of $17,000 to Waboos started when SJC stopped being paid in 1998. Keith Fontaine noted that something changed in the relationship between SJC and Perry Fontaine in 1999, as KAGF apparently started getting some of these monies and was being asked to give the money in cash to Perry Fontaine.

October 2000 Cruise

VFAF organized a cruise for October 2000 to the Caribbean, that was to be a training "Staff Retreat" for which all VFAF staff members were to attend without family members. Attendance was compulsory and documents indicate that various training activities were planned in advance of the cruise. This cruise took place during a period when VFAF was shut down for major renovations. Health Canada representatives, including Paul Cochrane, RD FNIHB Manitoba and the Head of the FNIHB Transfer Unit in Manitoba, were aware of the cruise at least two weeks prior to it occurring.

Summary of October 2000 Cruise Costs and Payments

Description
Net Cruise costs[1]
VFAF Staff members	61 passengers	$105,019
Perry Fontaine & Dolores Fontaine	2 passengers	6,062
Cochrane and Dirks Couples	4 passengers	9,445
Other Non-VFAF Persons[2]	8 passengers	14,031
Other additional costs		458
Total Cruise Costs		$135,015
Payments for the Cruise[2]
(VFAF) Credit Card Payments	$(133,814)
Transfer from Other VFAF travel	(2,006)
Non - VFAF Payments	(7,885)
Net Payments		(143,705)
Credit balance owing by Carlson Wagonlit to VFAF[3]		$(8,690)

NOTES:
[1] Net costs represent cruise costs, airfare, insurance, taxes and prepaid gratuities.
[2] Includes Carlson booking agent and spouse ($1,598), 3 person s from New Zealand ($7,913), Ray Lavallee ($1,941), Cheryl Waaka ($1,351) and Keith Fontaine ($1,228).
[3] Carlson Wagonlit
has confirmed this amount as owing to VFAF.

• Paul Cochrane has asserted that he paid $2,838 to cover the cost of the cruise for himself and his wife, and has provided a customer statement signed by the Carlson travel agent, who normally handled VFAF booking, to support this assertion, as well as a copy of his credit card statement. We have identified a payment to Carlson in the amount of $2,838, dated October 11, 2000, but the Carlson records do not identify the source of this payment. However, this payment appears to match the credit card information provided by Paul Cochrane. We note that we have calculated the cost for the Cochrane couple's cruise to be $6,078.
• Aline Dirks has asserted that she paid $2,790 to cover the cost of the cruise for herself and her husband and has provided a similar Carlson statement in support. We have identified a payment from Aline Dirks of $1,010 in the Carlson information. We note that we have calculated the cost for the Dirks couple's cruise to be $3,367.
• We have identified other payments from unknown sources of $2,690 which may or may not relate to the cost of Dirks' and Cochrane's cruises. Carlson will not release any further information supporting these payments other than to say that they came from non-VFAF sources.

Ken Courchene indicated that the October 2000 cruise was paid for with "bingo money" and "other own-sourced revenue". Subsequently, Ken Courchene indicated to us that he had no knowledge of the finances surrounding the bingo or the Pow Wow and that anything he said about finances in the press or to Health Canada was based on what Perry Fontaine told him and legal and accounting advice received. He further stated that in retrospect what he said about how the cruise was paid for may not have "been factually accurate", but again stated that he was relying on information given to him by Perry Fontaine.

Perry Fontaine has made reference to a document that he claims shows $900,000 of "private funds" represented by GST refunds, investment income, etc. that were used to pay for the cruise. He has not provided a copy of the document despite a written request and, accordingly, we are unable to comment.

VFAF operated a weekly bingo, the proceeds of which we understand were to be used for an annual Pow Wow, since at least 1996. Assuming the bingo funds were raised to pay for the Pow Wow and would first be used for this purpose, there were insufficient funds remaining to pay for the cruise costs.

According to Perry Fontaine, the cost of the annual Pow Wow increased each year reaching $400,000 in 1999. In 2000, Pow Wow costs were at least $125,000 including approximately $105,000 that was apparently paid in cash. While there may be some program value in having clients attend Pow Wows, various parties indicated that the annual Pow Wow became excessive and was too expensive for VFAF.

Healing Our Spirits

Effective July 1, 2000, Health Canada agreed to provide VFAF with $900,000 of funding for the 2002 Healing Our Spirit World Wide Conference ("HOS"). The funding was to be $300,000 per year for the period July 1, 2000 to March 31, 2003. There is no documentation or information to support the basis of the $300,000 per year. In fact, the conference was to be held in 2002, yet VFAF was being funded $300,000 for the year after the conference. Perry Fontaine and Aline Dirks both indicated that Ken Courchene negotiated this agreement with Paul Cochrane, but Ken Courchene stated that he did not have any involvement in the negotiations and was not aware of Perry Fontaine's proposal, noted below, even though Ken Courchene was elected the Co-chair of the 2002 HOS Conference.

Based on the HOS meeting costs, VFAF spent $41,477 of the $300,000 it received after July 1, 2000, leaving $258,523 of unused HOS funding with VFAF. This funding has been spent on other items by VFAF. In addition, we note that additional expenditures of $50,705 during the period October 1, 1999 to June 30, 2000 were identified by VFAF as relating to the planning and meetings of the 2002 HOS Conference.

Perry Fontaine's company, Ojibwe Anicinabe Gaagiidio Consultant Ltd ("OAG") was paid $83,000 from Health Canada funds to prepare a proposal related to the 2002 HOS conference. The funding was provided to OAG by Health Canada through a company in North Bay. The proposal could not be provided by Perry Fontaine, nor could Health Canada locate a copy.

New Zealand

During the period of our review we identified a number of trips involving travel either to or from New Zealand. This travel totaled $154,179 as summarized below.

Summary of Travel Related to Cultural Activity

Location	Period	Amount
Credit Card Costs - Airfare, Hotel, etc.
1. Winnipeg to New Zealand	February 13-24, 2000
Perry Fontaine family		$18,558
Staff		37,009
2. New Zealand to Winnipeg	August 25-September 24, 2000	49,504
3. New Zealand, Other Travel		32,808
Total Credit Card Costs		137,879
Other Costs incurred by VFAF
Per diems paid to Perry Fontaine/Ken Courchene		4,800
Payment to VFAF staff for billeting of New Zealand people		11,500
	TOTAL COSTS	$154,179

Perry Fontaine stated that the above noted travel related to cultural exchanges between VFAF and the Maori people of New Zealand. Perry Fontaine indicated that the Maoris attended the Pow Wow and Youth Conference during their visit and had done so at VFAF's expense for several years. Ken Courchene indicated that the culture and beliefs of the Maori group were different from those of VFAF and that the benefit or value of exchanges, if any, was questionable. Various other parties also questioned the appropriateness of the expense incurred related to these activities.

Questionable Transactions and Documentation after the October 2000 Cruise

During the period of our review, we note that there were a number of retroactive transactions that occurred after the October 2000 cruise, as well as, a number of documents that are questionable. Retroactive transactions represent items/actions that were undertaken by various people, VFAF and non-VFAF, after the October 2000 cruise in an apparent effort to support transactions/events/disbursements that had occurred previously. Together with this series of retroactive transactions are a number of documents which are questionable, particularly given the different representations about these documents by various people. In a number of instances the verbal representation provided by Perry Fontaine is significantly different than the representations provided by other individuals. In many of these instances the representations of the other people are consistent, but differ from those of Perry Fontaine.

Retroactive transactions and questionable documents include, but are not limited to the following:

• Reimbursements of amounts disbursed prior to the October 2000 cruise, when such reimbursements were not identified previously.
• Alleged contract changes and contract creation after October 2000 cruises.
• Contracts, which allegedly supported $623,000 of payments from VFAF to KAGF, were only signed in late 2000 or early 2001.
• Perry Fontaine's change to VFAF policy in November 2000 to enable him to offset costs incurred for himself and Paul Cochrane.
• Request of a third party in November 2000 to reverse December 1999 VFAF credit card charges for costs paid by VFAF relating to Paul Cochrane.
• Creation of a cash receipt, at the request of Perry Fontaine, to provide support for VFAF fund disbursement through KAGF. Perry Fontaine confirmed the created document was not valid/true.
• A March 2001 VFAF invoice, in the amount of $19,000 to Paul Cochrane related to costs incurred in 2000 but not identified as owing to VFAF until after the October 2000 cruise.
• At the request of Perry Fontaine, Kayla Dawson of Carlson created a receipt which indicated that Paul Cochrane paid $6,950 in cash to Carlson for a March 2000 cruise. Carlson has confirmed VFAF funds paid for this cruise and it did not receive cash for the cruise. Paul Cochrane submitted this receipt to Health Canada in ___ 2000 as support that he paid for the March 2000 cruise for himself and his wife.

Other Disbursements

During the period of review, we identified a number of parties who received a significant amount of funds from VFAF, that have not been discussed in other chapters of this report. These include the following:

VFAF Payroll

	Account	VFAF Cheque
Description	Disbursements	Disbursements	Total
Vera Bruyere	$63,266	$78,997	$142,262
Lana Daniels	$58,446	$138,876	$197,322
Levine Levene Tadman	$0	$235,540	$235,540

During the period from October 1, 1999 to October 1, 2000, the salary of Vera Bruyere increased from $32,000 per annum to $65,000 per annum. Effective October 1, 2000, she also started receiving a $1,500 per month travel allowance. Except for the amounts transacted through the VFAF payroll journal, there was not any supporting documentation provided for the other disbursements from VFAF to Vera Bruyere.

Effective October 1, 1999, the salary of Lana Daniels increased from $32,000 per annum to $50,000 per annum, and then was reduced after the October 2000 cruise to $26,500 per annum. Lana Daniels continued after the shut down of VFAF in a consulting capacity to provide administrative and clean up support. She was paid $5,687 for these services. In addition, a VFAF cheque in the amount of $115,000 was issued to Lana Daniels. These funds were apparently used for the 2000 PowWow as discussed in Chapter 7 of this report.

During the period of our review, a total of $235,540 was paid to the Winnipeg law firm, Levine Levene Tadman, now Levene Tadman Gutkin Golub, for various legal services, including: $180,216 related to dealing with matters that arose after the 2000 Cruise; $27,885 related to a monthly retainer; and $27,449 various other matters.