Judge calls Red Pheasant scheme ‘corrupt’

The illegal actions of a Saskatchewan First Nation chief and the gravel company that agreed to pay him alleged kickbacks are “no less corrupt” than the allegations of Quebec civic officials accepting fees for awarding contracts, says a Queen’s Bench judge.

W. Downer Holdings Ltd. took the Red Pheasant First Nation to court to try to get payment on a settlement agreement the First Nation refused to honour with the gravel-crushing company. The history behind the settlement reveals promised payments to the chief and, according to the judge, a possible “machiavellian scheme” by the First Nation to pretend to settle the lawsuit for its own gain.

“If both parties come to the court with unclean hands and participate in the same or independent illegalities, the court should ... assist neither,” Justice Brian Scherman said in a written ruling issued last month at Battleford Court of Queen’s Bench.

The story begins in 2010 when Red Pheasant Chief Stewart Baptiste entered into two contracts with W. Downer Holdings for the crushing and stockpiling of gravel.

The first contract, dated April 21, 2010, called for the crushing of 50,000 tonnes of gravel at the price of $6 per tonne.

The second, dated June 22, 2010, called for the crushing of an additional 25,000 tonnes at the price of $8 per tonne. That one came with a “sub-agreement” that said Baptiste would be paid $1 for every tonne crushed and $1 for every tonne sold under that agreement.

Neither contract was ever considered or approved by the band council of Red Pheasant, located about 30 kilometres south of North Battleford.

Wade Downer, president of W. Downer Holdings, testified he saw the sub-agreement as a referral fee and he didn’t see anything illegal about it, according to the ruling. “He said he thought that this was the way business was done with First Nations,” Scherman wrote.

The gravel company crushed and stockpiled a total of 75,000 tonnes. Red Pheasant paid $215,000 towards the first contract, but nothing for the second contract. Baptiste never collected any money.

W. Downer Holdings then commenced action in September 2010 for the $285,000 that remained owing on the two contracts. Red Pheasant took the position both contracts weren’t valid because they hadn’t been passed at a band council meeting, as required under the Indian Act.

Settlement agreement

In August 2011, Red Pheasant band member Graham Wuttunee — who had no authorization from the band council — began negotiating with Downer via text message. They agreed to settlement terms but rather than taking the agreement to council, Graham Wuttunee obtained individual signatures of six band councillors and gave the settlement agreement to Dale Wuttunee, the band manager.

Dale Wuttunee faxed the settlement agreement to Downer’s lawyer with the cover page reading, “Agreement signed by quorum of council.” Downer signed the agreement.

Red Pheasant never honoured it, possibly because it never intended to, Scherman found.

At the time the settlement was negotiated, a rural municipality wanted to buy some gravel from Red Pheasant, but it appears the RM “may have been concerned that the gravel would be subject to some form of lien if the litigation continued,” Scherman wrote.

After Red Pheasant got a copy of the settlement, it sold some gravel to the RM but never made any payments to W. Downing Holdings.

Scherman said he was “troubled” by evidence at trial that suggested at least some of the Red Pheasant members were “well aware” of the Indian Act’s provision about the necessity for band council meetings and that they conspired to deliver the non-valid agreement.

“This suggests a machiavellian scheme of making the litigation respecting the gravel seem to disappear for a time so as to permit the band to make an available gravel sale and then repudiate the agreement,” Scherman wrote.

Nevertheless, he found the settlement agreement is not binding on Red Pheasant because it wasn’t agreed to at a band council meeting.

However, the judge went one step further, commenting on the illegality of the June contract and the importance of contracts being awarded on the basis of merit “as opposed to being induced by the consequence of the payment of bribes, kickbacks or other underthe-table benefits.” Scherman drew a comparison to the ongoing Charbonneau Commission Inquiry in Quebec.

“It is no less corrupt to agree to pay Chief Stewart Baptiste and for Chief Stewart Baptiste to seek to receive a fee of $1 per tonne of gravel crushed than it is for Quebec contractors to pay, as alleged, a fee of one per cent to the city engineer and/or a 3.5 per cent fee to the mayor’s political organization for contracts awarded to them.”

Baptiste was re-elected as chief at Red Pheasant in March. He made headlines at that time because he learned of his victory while in a police cell on charges of violating a probation order.

He is also scheduled to go to trial on a drunk driving charge in August 2013.