N.W.T. Supreme Court found Ron Barlas 'engaged in egregious conduct and abused his position as CEO'
CBC
In a decision Wednesday, an N.W.T. Supreme Court Justice found evidence "replete with examples" of Ron Barlas using company resources for personal interests or to benefit his friends and family.
Justice Karan Shaner ordered that Barlas be removed as CEO of Łutsel K'e Dene First Nation's (LKDFN) business arm, Denesoline Corporation. He was previously suspended, but the order makes his removal permanent as Shaner found he had breached his fiduciary duties "in an extreme and egregious manner."
"Mr. Barlas engaged in egregious conduct and abused his position as CEO. There is no question he must be removed from any role in any of the LKDFN companies. Allowing him to continue in any capacity is untenable," Shaner wrote.
The decision comes as the latest development in the wide-ranging civil lawsuit LKDFN filed against Barlas, who for years ran Denesoline Corporation. The First Nation has accused him of diverting nearly $12 million from its companies for his own gain.
Larry Innes, legal counsel for LKDFN, said the First Nation is "obviously pleased" by the decision.
The case involved a large volume of evidence, which Shaner broke down in her decision Wednesday. The evidence shows how, over a decade, Barlas assumed more and more control over Denesoline Corporation and, along with his wife, Zeba Barlas, funnelled money into companies they fully controlled.
Shaner found Barlas misled Denesoline Corporation's board members and "worked to actively conceal his gains."
Shaner's decision frees Denesoline Corporation from agreements made during Barlas's tenure that benefitted his own companies.
Shaner also ordered a trial to determine the level of damages for LKDFN.
In a second decision also issued Wednesday, Shaner cleared the way for LKDFN to sue Reynolds Mirth Richards and Farmer LLP and KPMG.
The First Nation had alleged Reynolds Mirth Richards and Farmer was involved in preparing legal advice Barlas then used to defraud its companies and take control of those companies, as well as providing advice to Barlas on how go get around corporate governance procedures and get members to sign resolutions at annual general meetings, among other allegations.
The allegations against KPMG include that the firm was knowingly in a conflict of interest by acting for both the LKDFN companies and Barlas, personally; that it issued misleading financial statements; and that it gave misleading presentations to members.
"The LKDFN companies suffered substantive losses due to the actions of Mr. Barlas and, allegedly, the support of corporate counsel and accounting professionals," Shaner wrote.
Innes told CBC News his client would be filing a statement of claim on Wednesday or Thursday.
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