Richard Brouillard is a familiar figure to many Crees. He is one of the top consultants working for the Cree economic entities. In March, Bill Namagoose, Matthew Swallow and Eddy Diamond wrote a stinging letter accusing Brouillard of conflict-of-interest because he is both the controller of the Board of Compensation and a consultant to one of its subsidiaries, Servinor Food Wholesaler Inc. Servinor has borrowed $8.9 million from the Board of Compensation’s cash-management system.
In an interview with The Nation, Brouillard tries to set the record straight and talks about the future of Cree economic development He says Crees should develop a better understanding of their economic future and have a debate on their economic independence.
The Nation: You have referred to Bill Namagoose, Matthew Swallow and Eddy Diamond’s letter as insulting, reprehensible and unprofessional [see News, July 29], Do you feel you were unfairly criticized in their letter?
Richard Brouillard: To put it mildly. Yes, unfairly. Because it does try to give blame to one individual in 20/20 hindsight. In the sense that if it looks like things are the fault of somebody, that’s why I try to convey in the letter that it’s not a simple situation. That’s why I say it’s reprehensible. The people who signed the letter, used them and twisted the facts anyway.
So I try to use some language that isn’t vulgar but that conveys the situation.
The letter suggested you are in a conflict-of-interest, since you are both an advisor to Servinor and to the Board of Compensation. Why wasn’t it a conflict-of-interest?
For the last four years since I was asked to look into the affairs of the Board of Compensation on a part-time basis, I’ve been asked to look at a lot of the files of CreeCo. itself and its subsidiaries.
And the basis is, I guess, very simple. If there’s a problem in a subsidiary and lean help in solving it, that would help the subsidiary, and if it helps the subsidiary, it helps the owner.
So the conflict-of-interest was never seen. This is a new invention by these people for reasons I still haven’t understood.
Once you’re helping a subsidiary which is 100-per-cent owned by the Board of Comp., and if you help the subsidiary make profit, like in the case when I helped Cree Construction when it was in difficulty, like I did with Cree Energy when it was in difficulty—that helped the Board of Comp. So I still don’t understand how conflict-of-interst could be construed for some twisted reason.
There have been some changes in the cash-management policy since then. Do you see these as adequate or should there be more changes made?
Well, these types of things are more in the hands of the Board, and they can be changed as the necessity occurs.
The situation of putting some constraints on the amounts taken by a company—I think that is totally adequate.
Maybe the cash-management system should be looked at more on the basis of profitability. If a company becomes profitable in the short-term, the cash-management system still remains for the Crees in general a very useful tool. And it has proved that. Because it permits a subsidiary to get a loan or a line of credit at a very fair rate.
The money stays within the Cree world and that has proved to be very profiable and useful for the last eight years.
I don’t think if three people suddenly think it’s not worth it, it should suddenly be taken away. I think it would be much more worthwhile to have a profitable discussion of what is the cash-management system, how it came to be, who makes the decisions and how it’s used. And those discussions have not taken place.
That’s why in my letters I have tried to convey some of those points. It’s been reviewed regularly, it’s been discussed at the Board regulary, reports have been made. To me, the only surpirse I have out of that is that it was discovered by three people who suddenly think someone is taking money out of the cash-management system. In fact, that’s not at all the way it happened. And in fact, what I think is terrible in that is that they knew that. They are people sitting on the Board; they’ve seen the reports. My question is still : Why are they doing this? I still don’t understand
In your letter responding to Bill, Matthew and Eddy, you said Cree economic development is a difficult subject because there are social, political and business factors to take into account. What problems and solutions do you see to these?
What I meant is when evaluations and judgements are made after the fact, maybe the same factors should be taken into consideration. For example, if you start a business, you can say we could maximize profits by having so many jobs. But you can make a decision—and it can be a valid decision—saying: “No, we will have more employees.” Like we did a few years ago at Cree Energy, because they are Cree and we want to create jobs.
Obviously, you’re making a choice between maximizing profits at that point in time and decreasing profits while trying to maximize some other social impact.
But when three years later somebody comes up and says, “I want to look at the financial statements,” and says, “Gee, you’re not getting good rates of return and not taking into account the other factors,” that’s when things get very complicated, because the points of decision are sometimes not related to the points of evaluation.
I think it’s very valid to have a company where you make a decision not to have profits, but to maximize job creation. But it also has to be very clear that when such a decision is made, that the objectives are clearly set out and that the objectives are taken into consideration after the fact.
And that has occurred very often, and that’s what I mean when I say it’s complex. I don’t say the complexity should be taken away. Because I don’t see a point in time that you could maximize only one of those aspects .You can’t just maximize profits one day, because then you might have to locate or create jobs a different way. On the other hand, you can’t just maximize job creation. Then you could have a systematic loss situation that would have to be compensated for some how.
So how to balance all that is complex, and I think will remain like that. If people are in the position to do some evaluations but don’t take that into consideration, I think those people should be doing something else.
In your letter, you also talk about the cash-management system, and you say it’s been a constant cause of concern for both Board chair Roderick Pachano and yourself. How do you report to the Board on how the system is being used?
Well, if we go way back, it’s been used at different times. There are times when I personally made a very strong presentation to the Board to make sure the cash-management system was not misused. For me, it works on a case-by-case basis and the concern is to make sure the cash-management system is used in the best interests of the Crees.
In the case of Servinor, if that’s what you’re getting at, when the decision was made to go ahead with the construction of
Servinor [a reference to the food wholesaler’s $4.5-million warehouse in Val d’Or], obviously there were two ways to finance the interim period between the decision of construction and the long-term financing. It’s called bridge financing in technical terms.
Well, the tool was there and at that point in time, what’s very important to note here in the case of Servinor is we went back to the Board twice. We verified very clearly that the basic assumption of the project was that the Crees would mostly in the majority come into the project, which was the basis of the break-even situation. It was not the whole break-even situation, but if all the Crees come in, all you need after that is approximately 7 to 9 per cent of the Abitibi-Temiscaminque region to have a profitable situation. Well, the situation is that we have that percentage of the Abitibi region, but not enough of the Crees came in.
When you look back at the time when it was decided to go ahead, everybody said it was very simple. The Crees will come in, we’ll get that proportion of the market, we’ll have stability.
Now had that profitability been there, then the long-term financing would have been put into place. The money goes back into the cash-management system, and everything would have been very normal. And during all that period of time, the
money would have gone to the Board of Compnesation and not some exterior bank.
So based on that concept, it was a win-win situation for the Crees, except that one of the basic assumptions has not come into place. And like at the meeting at the Board, I’ve asked that this situation be discussed. But the real reason should be discussed, that the basic assumption was that 100 per cent of the Crees would come in. Any corporation in the same situation having the same tool would have done the same thing. Because it was the normal business way to do it. But as it turns out, with the Crees not wanting to go in, suddenly the long-term financing is more difficult.
So that’s where the real problem has been all along. It’s not in the way the cash management system has been used. It’s been used in a very normal business way, under the circumstances at the time which were discussed and approved by the Crees at the Board meetings. So for me, it is a constant concern. Not a concern in the sense that it is going bad. Concern in the sense that it’s being monitored and watched by all the entities using it. In the case of Servinor it was, it drew, it was being built, the equipment was being bought, the land was being bought, the inventory was being bought and by the time this was finished and we started looking for long-term financing, then we hit the other problem that I just explained. It’s not a simple situation. It can’t be explained simply either. Very tough to explain in two sentences.
Do you expexct Servinor to become successful? Because you say in the past, businesses have lost money when they just started out.
Yes, if I look at the situation and the way it’s developing in the other markets, the Inuit market, the North market, even the Abitibi market, I would say to you they have all been very satisfactory. Where we don’t know is in the Cree communities and the Cree merchants. If these people would accept to come in and buy from Servinor instead of the competition, we could get to the break-even point very quickly. Because the difference between the present level of sales and the amount necessary to break even is getting very small.
So a little effort from two or three of the major clients in the Cree commuities could make a big difference. That’s how dose it is. So yes, I am confident there can be a solution. It can be fast or slow depending on how it’s going to be perceived by the Cree merchants. And some of them even admit that the price we’re offering them is the same as the competition. But they just say, we don’t know yet. We want to wait.
So there is no apparent reason why this is going on, and I assume this type of media hype and the wrong presentation of the facts have not helped. And I can’t blame them for that because they have the facts that are reported to them. So it is quite a complex situation.
But the whole project of Servinor had two objectives. First of all, it was to make sure the Cree merchants would stop being at the mercy of outside suppliers, which in the past had wild price changes. The second objective is that if Servinor was accepted by the Cree merchants, you will have lower prices, better service and you will also have a profitable operation.
All this made sense, the studies were made, checked by outside sources, and everybody came up with the same conclusion—that if all these assumptions would become fact, you would have a great little company where the Crees would again be in control of one very important aspect of their life, which is food. Like they’re trying to do with construction or airlines, so that you’re not at the mercy of outside people.
What do you think of the recent takeover of the board of directors of Servinor, Air Creebec, CreeCo. and the rest by the Board of Compensation?
Since I’ve been working for the Crees, I’ve always accepted whomever the Crees name to run any business. And I think that if the Crees feel it’s the thing to do at this point in time, that is fine with me. My job is not to have an opinion on Cree politics. It is to say how can we run business in the best way possible.
You’ve expressed concerns about the widespread diffusion of the letter written by Bill, Matthew and Eddie that was reported on in The Nation.
Not only The Nation. What I meant is the widespread use of the CCs of the letter [sending copies to other people], even before asking questions—like shooting first and asking questions later.
In fact, I read this letter in your newspaper before I saw a copy of it myself. Well, I heard about it but I didn’t see it. And I want to make a point here. I heard people talking about the letter, and I have to admit I said we’ll deal with it when we get a copy. Then someone said it’s already been published in The Nation. So then I said I want to see the letter. So I tried to get a copy.
You said this letter is harming your reputation and you’d be considering your options. What did you mean by that?
I think at this point in time, I will leave that question open. My options are still open and I will consider what needs to be done to make sure that the facts get known. That’s what is important to me. If it can’t be done through normal communications that are available in the Cree world, then there is only one left. So if I have to use it, I will.
Anything else you would like to add?
I would like to add that I wish the tools the Crees have given themselves in the economic development sector could be better understood by them because they are very interesting tools they’ve got in their hands.
If they understand these tools better, some of the conflict will go away. That’s the reason I wanted to work for the economic development of the Crees because I feel very sincerely that there can’t be political independence if you don’t have economic independence. You need to have an economic backbone to sustain political endeavours.
And I still feel the best way to resolve the problems between the Crees and the white society is to be equal. To be equal means to have equal opportunities and equal means. The best way to do it is through economic development and being a big player in the most important fields the Crees have in the economic developments that touch them.
I think the Crees who created CreeCo. at the start had the right vision. Whether it needs adjustments is another matter. One hope I have is that these tools are not seen as enemies or drains, but something that can very useful for the Crees in the future.
There’s a bigger discussion that has to come somewhere—hopefully through debate in medias like yours where a larger debate can happen. The level of discussion should go from asking questions about the operations to elevating the discussion and saying: Do we want these tools and how can we use these tools for the nation, not for each individual? That would be very good. Going from nasty points to a discussion of what it’s all about.
The reason I’m doing this interview is that I think in any democracy, it is necessary to have information. If it’s badly used, it’s better to not have any. I’ll leave you with that point.