An investment fund aimed at creating jobs for First Nations people in Saskatchewan provided few employment opportunities and lost millions of taxpayers’ dollars.
According to recent financial statements, the Government of Saskatchewan lost $8.5 million through its First Nations and Metis Fund (FNMF) which was set up in 2006 under the Lorne Calvert government. The Saskatchewan Party took over the fund between 2007 to 2019.
“It was a high risk, but we had to do something to encourage First Nations across the province to get involved and be involved in the full economy of the province,” said Crown Investment Corporation (CIC) Minister Joe Hargrave.
The investments were set up similarly to venture capital funds. The government paid Saskatoon’s Westcap Management Ltd. around $3 million to manage the money without an expectation to achieve a rate of return, said Hargrave.
“The goal of this fund was not to be a moneymaker to provide revenue for the government. This was a fund to help First Nation and Metis communities,” Hargrave said.
Cindy Ogilvie, vice-president and chief financial officer of CIC, said the investments were similar to being a “lender of last resort.”
They were a matter of public policy as private-sector lenders were not interested, said Ogilvie.
However, it’s unclear if the government knew this as a loss proposal.
At a March 4 committee meeting, Ogilvie stated there’s an informal rule that venture capital investments fail around eight out of 10 times, while the others come with “fairly strong returns because of the high-risk nature of them.”
But no investments brought in revenue, which Hargrave now blames on the economy.
In one investment, the FNMF provided $1.8 million to Infinite Investments, who used that money to invest in Brigden Welding, which was owned by a former Sask Party MLA’s step-son. Four jobs were created, two of which went to Metis people. The company is only required to pay back $250,000 of the $1.8 million government loan.
Muskowekwan Resources Ltd. received a $3 million loan to invest in Encanto, a potash company. Over 250 jobs were promised, but zero were created. The company is required to pay back only $300,000 of the $3 million loan.
The Government of Saskatchewan is unsure how many jobs were created through the FNMF, but Hargrave estimates it’s somewhere around 80 to 160.
CIC critic Cathy Sproule says the FNMF served as a “slush fund” because there was no accountability and little money was paid back to the government.
While the government was losing millions, Westcap – which is owned by a top Saskatchewan Party donor – was making millions to manage the money, said Sproule.
“We’re talking about lost taxpayers dollars here,” said Sproule, who’s the MLA for Saskatoon Nutana. “That might be a couple schools, a hospital or a long-term care home in La Ronge.”