Indian and Northern Affairs Canada (INAC) has been stopped in their tracks in their efforts to divert Aboriginal funds to favoured non-Aboriginal banking institutions – at least until they come up with proof that they fulfilled their Duty to Consult with First Nations Organizations.

Alan Park, Chief Executive Officer of TWCC, said the Order represents a major victory for TWCC and all 57 Aboriginal Financial Institutions (AFIs) operating in First Nations, Métis and Inuit communities across Canada.

“We are particularly gratified that the Court is demanding the government produce documents that show Aboriginal organizations were consulted. We believe this is required under Section 35 of the Constitution Act.”

This will be a sticking point for INAC as all indications are that no such consultations ever took place.

The Federal government (and other provincial governmental bodies) appear to demonstrate a standard policy of ignoring and/or consciously violating the “Duty to Consult” requirement. The most egregious transgressor of this policy is INAC, supposedly charged with facilitating federal aboriginal affairs, positioning itself as the agent most closely associated with opposing the social, cultural, and economic growth and independence of Canada’s First Peoples. By excluding Aboriginal Financial Institutions, INAC is saying that Aboriginals are indeed second class, that they must remain under the yoke of non-aboriginal domination. This is despite the fact that aboriginal economics is outstripping and out producing the mainstream marketplace.

The History of the Disputed Loan Loss Reserve

Indian and Northern Affairs Canada (INAC) decided in 2008 to give loan guarantees to five selected non-Aboriginal banks and credit unions to stimulate lending to Aboriginal businesses in a program called the Loan Loss Reserve (LLR) Initiative.

AFIs were deemed to be ineligible for the LLR Initiative even though they have been writing business loans in Aboriginal communities for two decades.

TWCC is arguing in Federal Court that the LLR Initiative represents unfair competition because AFIs can’t offer the same interest rates as their subsidized competitors. Continued existence of these one-sided subsidies will threaten the viability of all AFIs.

Since their inception 20 years ago, AFIs have provided 35,000 loans to Aboriginal small business worth $1.4 billion with a success rate of 58%. This compares to a success rate of 35% among mainstream lenders.

Aboriginal Economy Getting Too Successful

It is indeed this very success that has provided the impetus for INAC (using aboriginal dedicated funds) to launch this non-aboriginal LLR program, effectively subsidizing non-Aboriginal money-handlers to control Aboriginal economic growth and, more significantly, disrupt and possibly destroy aboriginal financial institutions.

By using INAC money for this program it would be the equivalent of the federal government imposing a hidden tax on another ethnic group, say the Jewish population of Canada, in order to provide non-Jewish owned financial institutions to provide them with loans. Certainly the public would not stand for that or any similar scenario but in effect that is what is happening with aboriginal peoples in this instance.

The Federal Violation

Section 35 specifically protects the rights of aboriginals in Canada as follows.
35. (1) The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.
(2) In this Act, “aboriginal peoples of Canada” includes the Indian, Inuit, and Metis peoples of Canada.
(3) For greater certainty, in subsection (1) “treaty rights” includes rights that now exist by way of land claims agreements or may be so acquired.
(4) Notwithstanding any other provision of this Act, the aboriginal and treaty rights referred to in subsection (1) are guaranteed equally to male and female persons
35.1 The government of Canada and the provincial governments are committed to the principal that, before any amendment is made to Class 24 of section 91 of the “Constitution Act, 1867″, to section 25 of this Act or to this Part,
(a) a constitutional conference that includes in its agenda an item relating to the proposed amendment, composed of the Prime Minister of Canada and the first ministers of the provinces, will be convened by the Prime Minister of Canada; and
(b) the Prime Minister of Canada will invite representatives of the aboriginal peoples of Canada to participate in the discussions on that item

By not including AFIs aboriginal rights to play an equally effective role in their own development and non-consultation, in addition to being a flat out breach of Section 35, allows the federal government to unilaterally make decisions , demoting them to second class citizens – at best.

The Federal Court’s Stance

The Federal Court in this case has echoed these principles in it’s ruling. Ottawa has been ordered by the Court to produce all documents relating to the development of the controversial program that threatens continued viability of Aboriginal financial institutions (AFIs). In addition, the Federal Government has been ordered by the Court to produce all documents related to any purported or alleged consultations with any First Nations Organizations.

The Court Order was made at a Federal Court hearing before a Prothonotary in Winnipeg on August 10 in connection with an application for judicial review made by TWCC, a Manitoba AFI, in January.

A Prothonotary is a judicial officer appointed under the Federal Courts Act to exercise judicial powers in case management issues.

Protecting Native Rights

Though the case is not concluded, the Federal Government has been put on notice that aboriginal economic interests cannot be manipulated or swept aside in favour of benefiting non-Aboriginal corporations.

The sadder commentary is that the Federal Government still does not respect native peoples and will continue to seek methods to exploit or undermine them. It is another example of why continued diligence is needed to protect their rights and future in their own homeland.