Federal government says it will take FSIN to court to repay $12.4M in spending

Indigenous Services Canada (ISC) says it will file a statement of claim against the Federation of Sovereign Indigenous Nations (FSIN) to recover millions of dollars in spending, after issuing the group a final repayment notice last week.

ISC says it issued the organization, which represents 74 First Nations in Saskatchewan, a recovery letter seeking repayment of close to $12.4 million in funding, according to a statement shared with Global News.

The decision follows a similar legal threat issued last week by the FSIN, which said it does not accept the federal government’s conclusion or its claim that the expenditures are ineligible and is taking the department to court.

While the FSIN has not shared additional information about its legal action, Global News has obtained federal court documents filed by the organization in August, where the group is asking for a judicial review of what it alleges is unfair treatment by ISC, including the withholding of funds since being asked to repay what the department says is ineligible spending.

ISC’s final repayment notice to FSIN marks the latest development in a year-long dispute that earlier this year saw Indigenous Services Canada identify $28.7 million in ineligible and unsupported expenses between April 2019 and March 2024.

That figure was taken from the findings of a forensic audit ordered by ISC and conducted by KPMG, which last fall flagged $34 million in questionable, ineligible and unsupported spending related to COVID-19 expenditures, travel and payments made to a former employee.

The FSIN has consistently disputed the findings of this audit and has defended its spending.

ISC says it continues to meet with FSIN but will not provide details of those encounters or what transpired over the past seven months, during which the repayment amount dropped by over $16 million.

“Due to privacy requirements and contractual obligations between Canada and the recipient, we are not in a position to share the letter, discuss its contents nor disclose any details of any subsequent meetings between ISC officials and the FSIN Executive,” said ISC spokesperson Carolane Gratton in a statement.

ISC says department officials, not Minister Mandy Gull-Masty, are involved in its audit processes, and that ISC auditors met regularly with FSIN officials to share updates and request more documents.

The statement comes after FSIN disputed the audit decision and said the minister had only communicated with the organization through the media, despite repeated attempts to reach her by phone and email.

In its statement last week, the FSIN said the organization participated fully in the federal review and held extensive line-by-line discussions with a negotiation team appointed by ISC, adding the two sides had substantially narrowed the disputed amount by June 12.

According to the FSIN, federal representatives had confirmed that all purchases of personal protective equipment, accounting for almost $8 million of the current $12.4-million claim, were substantiated as purchased and delivered and had been removed from the list of ineligible or questionable expenditures.

The organization said it was surprised those expenses were subsequently added back to the amount being claimed.

In its statement, ISC says the FSIN has until Nov. 13, 2026 to “communicate with ISC for the repayment of the total amount to the Receiver General of Canada.” However, in the letter sent to FSIN, the department said this was the deadline for payment in full.

ISC has not provided additional information surrounding its statement of claim or clarification surrounding the deadline.

Global News has reached out to FSIN Chief Bobby Cameron for comment but has not heard back.

Legal action unusual for federal government

Policy expert Ken Coates says it is unusual for federal departments to seek legal action for repayment from organizations they support, as they typically have longstanding relationships with them.

“In fact, critics of federal government spending have actually said for many years that they’ve been far too lax about doing that,” he said.

The case going to court will likely spur a larger conversation about federal funding approvals and decisions made during the COVID-19 pandemic, Coates said.

“We’re gonna see what’s underneath the mushroom cap and we’re not gonna like it,” he said.

“We’re going to look and see how the Government of Canada authorized money. How did they make their decisions during the pandemic? What was the immediate oversight that was provided?”

With files from Alessia Simona Maratta