New controls are now in effect on the cash-management system.
Members of the Board of Compensation created the new controls after Servinor withdrew $8.5 million from a bank account managed by the board without getting the board’s permission. Most of the money was spent on a 67,000-sq-ft warehouse in Val d’Or that has already run into financial difficulties.
That will never be allowed to happen again. At a heated meeting in Val d’Or at the end of March, board members decided that Cree-owned companies can no longer spend money from the cash-management system on capital expenditures. Capital expenditures include buildings and big pieces of equipment. The money can only be used for operations.
Board members also put a cap on how much each company can withdraw under the cash-management system. From now on, no company will be allowed to receive over 75 per cent of its valid accounts receivable, or outstanding debts.
Under the cash-management system, Cree companies pool money in a joint bank account. When one of the companies has temporary cash-flow problems, it can borrow money from this account instead of going to the bank for a loan. The Board of Compensation manages $130 million in heritage funds granted to the Crees under the James Bay and Northern Quebec Agreement.
Board members asked fund managers to strictly adhere to the new rules so the Servinor situation won’t be repeated.
Board of Compensation chairman Roderick Pacha no, reached at his home in Chisasibi, did not wish to comment on the changes.
Servinor’s $4.5-million warehouse, now a year old, was built on the assumption that the food wholesaler would become the main food supplier to Cree merchants. The warehouse was also supposed to serve several smaller markets—the Inuit, retailers in Abitibi-Temiscamingue and construction crews working on the Great Whale River Project.
But the most important market—the Cree merchants—hasn’t taken off, according to Richard Brouillard, the controller of the Board of Compensation.
“One of the basic assumptions of building the warehouse was that all Crees should come into the project. That does not appear to be happening,” he told The Nation last month. “If you take one of the basic assumptions out of it, you may have to look at it again.”
Grand Chief Matthew Coon Come said that news is “disturbing.”
“I know that prior to establishing Servinor there was general agreement among the entrepreneurs that we needed such a service—a regional food distributor,” he said.
Told of Brouillard’s statements, Coon Come said, “If that’s what he’s saying, it means the bands have backed out or are still maintaining their relationships with the old distributors.” He added, “The only way it’ll work is if local
entrepreneurs support it.”