Servinor has withdrawn $8.5 million from a bank account managed by the Board of Compensation without getting permission from the board.

The move has prompted calls for stricter controls on how the Board of Compensation manages its funds. Servinor also raised eyebrows because it spent much of the $8.5 million on a costly new warehouse which has already run into financial difficulties.

“You can’t just write yourself a cheque,” said Bill Namagoose, one of three CRA representatives on the Board of Compensation. “The system will be reviewed. There should have been more control and a cap on how much is withdrawn. Eight or nine million dollars is a little excessive.”

Richard Brouillard, controller of the Board of Compensation and the man responsible for approving Servinor’s cash withdrawals, agreed. “I am totally in favour of getting some system in that says permission will have to be requested beyond a certain level.”

The $8.5 million was withdrawn under the Board of Compensation’s cash-management system. Under the system, Cree economic-development 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 idea is to reduce how much Cree companies pay to the bank in interest charges by giving less profitable companies access to the resources of the more profitable ones.

The Board of Compensation is the body that administers $130 million in heritage funds granted to Crees under the James Bay Agreement.

But the system was designed for temporary withdrawals of several hundred thousand dollars, not $8.5 million. That sum represents about half of Servinor’s total revenues for all of last year.

Servinor’s controller, Marcel Lefebvre, wouldn’t comment on the controversy, beyond saying that the company followed “normal procedure.” Marcel Lacroix, the company’s director-general, is currently on vacation and could not be reached.

Namagoose said controls will be implemented on how much can be withdrawn at the next meeting ofthe Board of Compensation in Val d’Or, which starts Mardi 22. He said Servinor is currently negotiating a $7-million bank loan and will have to repay the Board of Compensation as soon as that loan is finalized. He said he didn’t know whether Servinor has been told not to with-draw any more money.

Brouillard said the cash-management system is worth keeping and has saved Cree companies hundreds of thousands of dollars in interest charges. “I don’t think the cash-management system should be scrapped. I think this would be a case of throwing the baby out with the bathwater.”

He acknowleded that Servinor’s new 67,000-sq-ft warehouse in Val d’Or, which cost $4.6 million, isn’t turning out to be the investment the company had hoped for. The warehouse, now a year old, was built on the assumption that Servinor would become the main food supplier to Cree merchants and to construction crews working on the proposed Great Whale River project. Both markets haven’t taken off.