As Southern Chiefs Organization grand chief hopefuls make their final bids for support in tomorrow’s election, some members of the incumbent chief’s home community are trying to get out of what they say was a raw deal he saddled them with.
Terry Nelson is seeking re-election as grand chief. But before his stint with SCO, Nelson was chief of the Roseau River First Nation when a controversial deal was inked in 2007 that partnered his daughter Kathy with the band’s former third party manager, David Doer. They opened the Red Sun Gas Bar and Smoke Shop together on a then-newly-formed urban reserve located at the junction of Highway 6 and Winnipeg’s Perimeter Highway.
APTN Investigates has learned the gas bar – which has been operating for a decade – has no legal standing to be in operation.
The lease agreement is not recognized by Indigenous and Northern Affairs Canada because the land in question was never properly designated for commercial use, as is required under the Indian Act.
The gas bar was up and running before a 2008 referendum vote was held to find out if band members agreed. That didn’t sit well with some, and the designation was rejected by a vote of 93 to 91.
That means the land cannot be leased.
But Roseau’s current band council hasn’t evicted the tenant and in fact, signed a new 20-year lease with Doer – this time without Kathy Nelson. The lease requires Doer to pay Roseau $10 a year in rent. In exchange, he runs the gas bar, keeps the profits, and gets half the community’s tobacco rebate.
Red Sun submits tobacco receipts to the Manitoba government which then sends a monthly rebate cheque to the First Nation in recognition of Section 87 of the Indian Act, which grants tax exemption to Status Indians for things including gas and tobacco.
“It doesn’t make any sense that we should be giving that tobacco tax sharing to someone who isn’t Native,” says Roseau River councillor Cecil James. He adds Roseau’s rebate cheque is currently about $170,000 a month. Half of which goes to Doer.
About $2.1 million of community cash went into the Highway 6 land, which is where the gaming centre and Red Sun operate.
Roseau has a unique governance structure that sees a custom council, made up of family representatives, operate parallel to band council. And while band council has honoured the Red Sun deal despite the required land designation, the custom council is meeting tonight to discuss a plan to ask Ottawa to step in.
“Our Election Act and our band Constitution give us that power,” said custom council chairman Randy Thomas. “We are looking for legal opinion on where we stand. The plan is (to evict) because there’s no designation on that land.”
Terry Nelson was removed as chief in a coup by the custom council in 2011 over allegations of financial mismanagement, and in part because of the Red Sun deal. A deal he still stands by today.
“Fifty percent of something is better than 100 percent of nothing,” says Nelson, in defence of the tobacco sharing agreement with a non-Indigenous, non-tribal member when asked about the deal by APTN.
And he notes the gas bar “created 35 jobs.”
Some band members, like James and Thomas, believe money from the community’s $80-million trust could have been used to set up a community-owned and operated gas bar – with 100 per cent of its profits and the tobacco rebate staying in the community.
And they say they believe Doer has made enough money operating the gas bar over the past ten years on goodwill alone. They argue that Doer set up the shop on undesignated land and therefore runs the risk of that designation falling through.
Nelson argues the band, which is perpetually in third party management, isn’t capable of running a gas bar.
“Show me where someone else has come in and done something. Show me some jobs that have been created,” he says, referring to the two chiefs who have been in power since him.
APTN has obtained letters from Indigenous and Northern Affairs Canada that show the federal government is aware that a business is operating on reserve land without a valid lease but hasn’t intervened.
“We’ve asked them to step in, but there was a lack of a will there,” James says.
In an email, INAC justified its inaction saying that another attempt at designation is “underway at Roseau River… and we are respecting that process.”
In 2014 a previous chief, Ken Henry Jr., led a takeover of Red Sun. A provincial court judge, however, ruled the lease meant Doer had the right to operate there.
“The provincial court judge wasn’t aware of the idiosyncrasies of the Indian Act. You can’t actually lease or sublease without that designation,” says Jacqueline Romanow, chair of Indigenous Studies at the University of Winnipeg, who specializes in indigenous property rights and economic development.
Romanow was shocked to see the rent amount.
“While the property out on Highway 6 might not be as valuable as it is in the middle of the city, I’m not aware of any property you can lease for $10 a year,” Romanow says. “It doesn’t make sense. It certainly doesn’t seem to be a good deal for the community.”
Current chief Alfred Hayden refused numerous attempts to speak to APTN Investigates about the Red Sun deal or why he signed this new lease, which once again lacks the necessary land designation.
Romanow says if Roseau band members do vote in favor of designating it, the lease immediately comes into effect.
Doer has not returned multiple requests for an interview.
Roseau River has a band council election coming up this spring.
James and Thomas say they believe a willing band council can get the community out of this deal before a new designation vote is held.
Meanwhile, the Southern Chiefs Organization elects a grand chief tomorrow, for which Nelson is one of six candidates vying for the job.
For more on this story, tune into APTN Investigates for “Where There’s Smoke” on Friday, January 20th.