We take issue with certain inaccurate statements made in the article in the January 27, 2012 issue of The Nation entitled “CREECO board nixes new structure – for now”. If not corrected, they could cause unfounded concern among the Cree people of Eeyou Istchee regarding the establishment of the Cree Development Corporation (CDC). These concerns, including those about local control and taxation, must be clarified.
This is the second attempt to pool the funds of the Board of Compensation and James Bay Eeyou Companee into a stronger economic development fund to be managed by the CDC. The first attempt was proposed to take advantage of the development opportunities made possible by the Paix des Braves. Had the CDC been in operation to support Cree participation in the rapid development of Eeyou Istchee over the last ten years, wouldn’t there have been more job and business opportunities created for the Cree? But the reorganization did not happen. In the end, the funds of the Board of Compensation and Eeyou were not made available to support Cree participation in the new development opportunities.
1. CREE DEVELOPMENT CORPORATION – WHY NOW?
Cree people may be asking, why establish the CDC now? What is the urgency? The urgency is that time is running out. The Plan Nord has been launched. The governance of Eeyou Istchee is being revised under the Framework Agreement we signed in May 2010. New development projects are being announced in Eeyou Istchee and so we now need a development vehicle to be able to participate in these initiatives.
At this time, the main challenge facing the Cree Nation is to create opportunities and jobs for our young people and for those who are out of work. We must meet this challenge in the context of the Plan Nord and the increasing number of development projects in the mining, forestry and energy sectors. The only way we can do so is if we have a Cree entity to invest in development that has enough capital to help Cree companies to take a strong position in the new development opportunities. And the only way that the needed capital can be provided is if we “pool” the capital from the various entities where it now sits.
This is a critical time in the history of the Cree. We are putting in place a new governance regime in Eeyou Istchee. We are working very hard to make the Plan Nord benefit the Cree. But we Cree must choose. We can either be players in the Plan Nord and take the benefits, or we can sit on the sidelines. To be players, we need a Cree development entity that has a global vision for development and that has enough capital to make it happen. That is the role intended for the CDC.
2. THE NEED TO RATIONALIZE CREE ECONOMIC ENTITIES
At various Annual General Assemblies and Special General Assemblies, there have been calls from the Cree to rationalize the economic development efforts of the Cree Nation and to pool our financial resources.
The Board of Compensation has made important contributions in the past to the development of Cree communities and Cree rights. However, many things have changed since the Board of Compensation was created in the 1970s, and the needs of the Cree have evolved. The Board was originally intended to serve as a guardian of Cree Heritage Funds and to provide a “war chest” to ensure that Governments met their obligations. But the Board of Compensation and James Bay Eeyou model has had its day.
The Board of Compensation is no longer required to pay for the implementation of Cree rights. The New Relationship Agreements we now have with Canada (NRA) and with Quebec (PdB) are now providing the Cree Nation with resources to address many Cree needs in various fields, as originally intended through the James Bay and Northern Quebec Agreement.
The Wyapschinigun Fund has been created to act as the new backstop and Heritage Fund for future generations. This Fund will grow into the largest Cree capital pool over time, in the billions of dollars over the life of the Paix des Braves. Further, the Wyapschinigun Fund has the same tax exempt status as the Board of Compensation.
The James Bay Eeyou Companee was originally set up to carry out remedial works and invest in community development. However, Nisakamoon Corporation is now better suited to carry out remedial works. In this regard, what has been proposed is to transfer the Mitigating Works Fund in the amount of about $39 million to Niskamoon Corporation. The goal is to avoid duplication and to ensure that Cree entities are rationalized and administrative costs minimized to increase service levels to our local people.
Furthermore, the plan calls for transferring the Community Fund totaling some $70 million now under Eeyou to the communities. They will then have the capacity to manage these funds in their own best interests, but with certain conditions to ensure compliance with the original intent for the use of funds agreed to with Hydro Quebec in the La Grande 1986 Agreement.
For some time, concern has been growing that the Board of Compensation provides few tangible benefits to the Cree communities since it put a moratorium for community funding in place when the Paix des Braves was signed. Yet its administrative costs, including those for professional money management, are high. Pooling the Board’s funds with those at Eeyou would reduce costs and free up capital to invest in creating more job and business opportunities for the Cree.
The article raises a number of concerns. The first is about the relation between the creation of the CDC and control over Cree development. In fact, the CDC will be a tool
to increase Cree control over our economic and community development, not decrease it. It will enable us to take charge of our development. This is, in fact, the core mission of the CDC. The Paix des Braves states that the CDC will be dedicated to the economic and community development of the Cree, and act as a modern development organization with the mandate of supporting the long-term development of each Cree community.
Cree control over the CDC is ensured by the fact that the Cree Regional Authority will own all the shares of the CDC. Québec will not own any shares. The CDC will be accountable to the Cree communities through the Council/Board.
As for tax, one should note that CreeCo and its companies Air Creebec, the Cree Construction and Development Company Ltd., Valpiro and Servinor are already taxable. In fact, CreeCo paid $3.7 million in taxes in 2010 and $3.6 million in 2011. In any event, tax matters, while important, cannot be the main factor in the Cree economic development strategy. The first objective should be to create jobs and opportunities for the Cree, not to try to avoid taxes by not doing any development.
Moreover, the Cree Regional Authority (CRA) is a non-taxable entity. So any dividends paid by the CDC to the CRA will be non-taxable in the hands of the CRA. The Wyapschinigun Fund is also tax exempt, like the Board of Compensation. The tax protection of the Heritage Funds will remain the same as it is today.
Concern has also been expressed that the CDC may compete with local Cree businesses. That will not happen. The CDC will not be an operating company. It will not be engaged in construction, transport or other activities on the ground. The CDC will complement local Cree initiatives, not compete with them. It will be able to invest in local Cree companies and businesses as well as regional and national ones.
There is no basis for the concern that the creation of the CDC could undermine Cree treaty rights. Nothing in the creation of the CDC will affect Cree treaty rights under the JBNQA. In fact, it will empower the Cree to take full advantage of their treaty rights, by strengthening and consolidating their financial resources so that they can take part in the economic life of Eeyou Istchee.
The assertion that none of the Board of Compensation members agree with the CDC plan is not correct. As a member of the Board myself, I have spoken with Board members who have expressed their support for the plan to create the CDC and rationalize the Cree economic entities.
4. CDC IMPLEMENATION PROCESS
That is why the GCCEI/CRA Council/Board, by its Resolution 2011-07 adopted one year ago, on February 3, 2011, approved the establishment of the CDC through a long-term capitalization plan and the integration of various Cree economic activities. The resolution called for the phased dissolution of the Board of Compensation and the transfer of CreeCo to the CDC. It instructed the Grand Chief to take all necessary actions for the purpose of developing and implementing these initiatives aimed at the integration of certain Cree economic entities and the rapid establishment of the CDC.
In accordance with these instructions, the Grand Chief gave instructions to prepare an implementation plan for the creation of the CDC and the integration of certain Cree economic entities. He also established a joint steering committee with the management of the Board of Compensation to review the proposed implementation plan.
The implementation plan proposes a process that would proceed in phases. This phased approach will allow different options and strategies to be fully evaluated as implementation proceeds. No option has been closed. As for the Board of Compensation itself, one option would be to integrate it into the new Cree Nation Government to be created. Another possibility would be to retain the Board as an investment entity. In the first phase, the ownership of CreeCo’s shares would be transferred from the Board to the CDC. Its staff would be integrated into the CDC.
More recently, Council/Board has adopted a resolution mandating the Grand Chief to continue to explore and develop concrete measures, alternatives and proposals for the implementation of the CDC. The resolution also mandates the Grand Chief to continue to work with the concerned entities to develop a step-by-step approach for the rationalization of the entities. The Grand Chief has given directives to move forward with this mandate.
At this critical time for the Cree, we must all work together for the common good. This is not about what is good for this or that specific entity or its management. It is a time to rise above, to ask what is best for the Cree Nation as a whole. We are confident that all concerned will work together to meet this goal.