Auditor says an agency used a Moose Factory woman to tap into the federal Indigenous procurement program

One of the people auditing the firms bidding for contracts via the federal Indigenous procurement program says more work needs to be done to respect procedures and policies.  Garry Hartle uses a northern Ontario joint venture as an example to illustrate some of the issues he witnessed.

Hartle worked as a compliance auditor for the program between 2016 and 2023, and he appeared before the committee on government operations on Tuesday to answer questions from MPs.

The federal Indigenous procurement program is a strategy that aims to have Indigenous businesses receive contracts for goods and services destined for Indigenous communities.

To qualify for the program, at least 51 per cent of the business must be owned or controlled by an Indigenous firm, and Indigenous businesses and/or Indigenous subcontractors must perform at least 33 per cent of the work that is required to fulfil the contract.

In his presentation to the committee, Hartle focused on what he called one "particularly egregious file" involving Pearl Chilton, an Indigenous nurse based in Moose Factory. 

Chilton is the sole employee of Pedabun 35 Nursing, a company that partnered with a non-Indigenous firm called Canadian Health Care Agency (CHCA) to bid for federal contracts set aside for the Indigenous procurement strategy.

Through this joint venture, the two companies secured an eight year contract worth $160-million to deliver services to remote Indigenous communities.

Hartle says he audited the companies in 2017 to ensure they met program requirements, and concluded that "the joint venture was a shell for the non-Indigenous CHCA firm." 

He alleges the owner of the CHCA promised Chilton she would make a lot of money, but did not involve her in the joint venture, even going as far as inflating the number of employees working for Pedabun 35 Nursing. 

"Chilton was left with a large GST tax bill because of the way that they were submitted to the Canada Revenue Agency," said Hartle. 

Alberta conservative MP Garnett Genuis said this sounded like "the relationship was not only fraudulent vis-à-vis the government, it was exploitative vis-à-vis the person who was supposed to be the Indigenous partner." 

File amounted to fraud, argues auditor

Hartle said that, in his view, the CHCA's actions amounted to fraud, but his request for police involvement went unanswered. 

"I thought it was fraud because you can't invent employees for a company and submit that in your bid proposal to win the contract," he said, adding that the number of employees in the Indigenous company helped score points to win the contract.

Hartle says that he would do, on average, 100 audits a year while working for the program and that the non-compliance rate was low – about 10 per cent or less.

He called for more accountability in the respect of procedures in the Indigenous procurement program. 

CBC reached out to Chilton and CHCA for comment but did not receive an answer by time of publication. 

A program worth protecting, says Indigenous Services Minister

Indigenous Services Minister Patty Hajdu's press secretary tells CBC that Indigenous businesses have been excluded from economic opportunities for too long, and that his program is worth protecting. 

"These allegations are serious, and we are taking immediate action to call for an external audit to make sure that the proper checks and balances are in place," she said.

As for Indigenous Services Canada, a spokesperson tells CBC in a statement that "the Government of Canada takes the issue of non-Indigenous businesses misrepresenting themselves as Indigenous businesses very seriously."

It adds that the "department's work to verify the eligibility of businesses for the Indigenous Business Directory and the Procurement Strategy for Indigenous Business is ongoing."

Earlier in December, the committee voted for a resolution stating that companies that engage in Indigenous identity fraud should be barred from accessing any government contracts. That recommendation is to be presented to the House of Commons.