Jim McCarthy is a 12-year veteran of the Department of Indian Affairs. On February 27, McCarthy appeared before the Cree Naskapi Commission to discuss problems with the James Bay Cree bands submitting year-end audited reports on time and the high levels of indebtedness that afflict some band councils. One of his former positions was in the department’s finance branch, where he was able to look at the bands’ financial position from a global perspective. He has been the director of the James Bay Implementation Office for two years and has some responsibility to ensure financial accountability for Cree bands.

The Nation: You say that none of the bands were delivering their audited statements on timet: Jim McCarthy: That’s correct. Under the Cree Naskapi Act there’s a requirement for bands to have the financial statements in by 140 days after the end of the fiscal year. Last year none of them made that date. One Cree band was ten days late. The others were considerably later than that with an average of 75 days late.

How long was the latest?

I’m not going to mention the name of the band as I feel that’s a little private. The latest was the 30th of January (2002).

What about the other First Nations in Quebec, are you having problems with them?

Out of the other 30, 7 were on time and the average was 24 days late.

There’s quite a difference between the Cree and other First Nations?


You’ve talked about high levels of indebtedness. What are we talking about here?

I didn’t get into that in my report. The highest one is on a remedial plan. I don’t think the others will be but that doesn’t mean there aren’t debt problems somewhere.

You said some services could suffer because of this level of debt. Is this based on past experience with other communities?

Well, one particular example that we have encountered is that unless there is a remedial action plan in place and working for a certain period of time we are required not to allow ministerial loan guarantees. An unresolved debt can affect a community’s ability to benefit from a ministerial loan guarantee. It’s a fairly concrete consequence that results from indebtedness.

It is also a possibility that if statements are late then discretionary funding could be withheld. This doesn’t apply to essential services though. So there are consequences to indebtedness and having your statements come in late.

If these levels continue will you be looking at putting more Cree communities into some form of financial management plan?

We are advised on that by the Quebec region office of DIAND. We work together on that type of thing and they have the analytical responsibility. That, of course, is a possibility for the Cree First Nations as much as it is for the other First Nations. One of them is in a certain level of intervention. I would hope not to have to go farther.

You’ve asked the Cree Naskapi Commission (CNC) to look into the root causes. What types of things are you talking about? What have you seen as root causes of high levels of indebtedness?

I can’t really speculate.

What have you see in other communities or is it a case by case situation ?

It tends to be case by case. What we said to the CNC is this is an issue regarding the implementation of the Cree Naskapi Act (CNA). The CNA gives a degree of self-government to Cree communities so we think it’s very much something that lies within the mandate of the CNC. The CNC is to report on that implementation. So what is it? Is it a lack of internal capacity? Is it a lack of training? Is it excessive staff turnover? Is it an accumulation of unwise decisions, bad luck or poor investments? We don’t know.

You said a lack of debt is critical to self-government?

I didn’t say that. Debt wisely used can be a tool for development. Many of us have mortgages, but the key is the ability to pay it off. There are situations where First Nations use debt for certain purposes. The issue is whether they are able to manage the debt.

You’ve said that funding that goes through the Cree Regional Authority is difficult to track. Exactly how so ? We’ve been discussing with the CRA the difficulties in the way the funding goes through the CRA and then to the individual bands in terms of seeing where it all goes and is ultimately is spent because the Minister (Indian Affairs) ends up being accountable for that spending to Parliament. The CRA has indicated they are willing to sit down with us and discuss that.

Is there anything else you would like to add?

Simply this was in the context of an overall report on our part to the CNC in which we pointed out we had certain issues with respect to implementation. We were also pointing out the Federal contribution to implementation of the CNA in terms of funding provided and such. We felt was something the commission needed to take note of and to reflect in its reporting.

Note: Numerous calls for comment on this issue to the Grand Council were not returned.