After a decade of sinking money into Cree economic-development efforts, a potentially controversial new study says the efforts have been a failure and cost Crees millions of dollars.
Cree economic-development companies lost money in eight of the last 10 years, says the study. Crees could have made $60 million more just by investing the money in mutual funds.
Grand Chief Matthew Coon Come responded to the study’s findings by calling for a major overhaul of Cree Regional Economic Enterprises Co. (Creeco), the holding company for Cree Construction, Air Creebec, Cree Energy, Valpiro and Servinor.
“I believe that the status quo is not viable and that it is time for major changes,” he wrote in a letter to Cree leaders. The letter was sent on January 19 to all Cree chiefs, band councils, Creeco board members, the Board of Compensation and the James Bay Eeyou Companee. Copies of the study and letter were obtained by The Nation.
The economic-development efforts were intended to create jobs for Crees and make Cree society more prosperous and self-sufficient. But many Crees have long suspected the efforts were not succeeding and that Cree-owned economic-development companies have spun out of control. The study, which was commissioned by the Grand Council of the Crees, confirms these fears.
The report says the Board of Compensation invested $45 million in Creeco between 1984 and 1993. Nonetheless, due to persistent losses, Creeco was worth only $25 million in 1993. If the $45 million had just been put in the bank, it would be worth $85 million today, the study found. If it had been invested in pension funds, it would have yielded $75 million.
The last time Creeco made money was 1988. Last year, it suffered a record loss of $6 million.
“We have not been very successful at creating Cree employment and that Creeco is not profitable. It depends upon the heritage funds every year. This dependence weakens the Cree Nation,” Coon Come said. Creeco should also be “more accountable to the Cree people,” he said. “Gone are the days when we could work with the accountants to put the best face on our annual reports.”
Coon Come criticized Creeco for constantly going to the Cree Board of Compensation for financial bail-outs. The board has disbursed millions of dollars of Cree heritage funds received from the Quebec government to Cree-owned enterprises seeking grants and loans. Coon Come also complained about Creeco’s mounting debt. During the last decade, he estimated that the company racked up debts of $40 to $60 million. “It is time that we forced Creeco to stand on its own.”
Creeco president Abel Kitchen disagreed with Coon Come’s estimate of Creeco’s debt, claiming the figure was only $20 million.
But Kitchen conceded that many of the Grand Chief’s concerns are valid. “This is the kind of thing that needs to be said. It’s true what is being said here.”
He added that Creeco is not the only entity at fault for the woes of Cree economic-development efforts. The Board of Compensation is the ultimate decision maker in the distribution of Cree heritage money, he said, not Creeco. “They’re the people who disburse the money and make the policy.”
See full text of Matthew Coon Come’s letter on page 23. Special report on Cree companies and jobs in an upcoming issue.