Łutsel K'e Dene First Nation accuses Denesoline boss of taking millions

The Łutsel K'e Dene First Nation (LKDFN) and its chief are accusing the head of the community's own economic development arm of funnelling millions of dollars away from the corporation into his own businesses.

The claims aren't proven in court, but in a memorandum filed to the N.W.T. Supreme Court and first reported by Cabin Radio, the First Nation and Chief James Marlowe say Ron Barlas's conduct "falls at the most egregious end of the spectrum of corporate wrongdoing." 

The Łutsel K'e Dene say Barlas diverted up to $14 million of Denesoline Corporation revenues into his own businesses during the years he worked as CEO of the band-owned corporation. They call it a case of "blatant self-dealing." 

LKDFN also says Barlas manipulated how companies related to Denesoline were run to protect his leadership position and to prevent independent oversight, that he unilaterally appointed and removed directors, and that he failed to hold statutory annual meetings. 

The First Nation hired Barlas to head up the corporation in 2014, and it says it's still investigating Denesoline's finances.

Barlas is still officially the CEO and director of Denesoline. The First Nation is in court in Yellowknife on Friday to ask the court to halt the removal of assets from Denesoline companies. 

It's also asking for a freeze on the assets of the companies it believes Barlas funnelled money to.

When asked by CBC News for comment, Barlas forwarded a copy of his own affidavit — which he says has now been submitted to the court — saying many of the allegations against him are "false, unfounded or misleading."

He said Denesoline is the only Indigenous community-owned company in the N.W.T. to "have no debt, feed its entire remote arctic community year-round, redistribute its wealth into the community, [and] sponsor youth and education programs."

The amount of money the band is alleging is involved in the case is huge considering the size of the community. The First Nation has about 800 members, and around 300 people live in the community itself, which is on the on the east arm of Great Slave Lake, about 150 kilometres from Yellowknife. Lutsel K'e is one of the closest communities to the N.W.T.'s three active diamond mines and it has some form of impact benefit agreement with each one. 

LKDFN designated Denesoline as a business with rights to the benefits of those agreements, and as such, its main source of revenue comes from contracts to provide the mines with goods and services. Aviation, freight, explosives and mine site construction are a few of the things it can provide, according to its own website. 

Most of the evidence in the case so far comes from Iqbal Bhatti, a former Denesoline employee who LKDFN describes in court documents as an "insider and whistle blower." 

Bhatti worked for the corporation between 2017 and 2022. In a sworn affidavit he says he decided to come forward because if he didn't — Denesoline would "continue to be operated to the detriment of its primary stakeholders: the LKDFN." Of all its revenues, Bhatti says Denesoline spends no more than between $400,000 and $500,000 on the community per year.

Bhatti said he was "well-acquainted" with Barlas when they both attended the same American college in 1983. He said he moved from England to Canada with his family in 2017, after Barlas called him "out of the blue" with a proposition that he develop a waste management project in Łutsel K'e, through Denesoline.