The former CEO of the Łutsël K’é Dene First Nation (LKDFN ) engaged in “extreme” and “oppressive conduct” which harmed his employers while enriching himself and his family with millions of dollars, a judge has found.
In a 53-page decision, Supreme Court Justice Karan Shaner ruled Ron Barlas breached his fiduciary duties to the LKDFN by failing to disclose his own interests, “which were significant,” and he caused his employer to enter into agreements, transactions, and governance structures which were unfair and prejudicial.
“In my view, the oppressive conduct here is extreme and the consequences for the LKDFN Companies and their stakeholders are so serious that significant intervention is warranted,” wrote the judge in her ruling this week on a lawsuit brought by the first nation.
“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 also found Barlas’ wife Zeba assisted in the transactions and that she was “a knowing recipient of the proceeds and benefits.”
Shaner ordered there be a trial on the actual amount of financial losses suffered by the LKDFN’s companies, which will require forensic accounting and other experts. The YKDFN believe the losses to be between $10 million and $14 million.
Łutsël K’é Dene First Nation. (Photo courtesy of GNWT/MACA)
One of the ways Barlas breached his fiduciary duties was through an agreement, also signed by his wife, which resulted in a $2.2 million payment to their company Northern Consulting Group (NCG).
That money was then used to purchase a cabin, a residence and a commercial property #1 Small Lake, 221 Niven Drive, and 84 Curry Drive. Those properties are now held in a trust.
Both adult Barlas children were on NCG’s payroll, one earning a salary of $76,450 and the other $73,700.
Diverted LKDFN money was also used to pay for college tuition, cosmetic surgery, travel, liquor, and high-end clothing, stated the court decision.
A scene at Łutsël K’é Dene First Nation. (CKLB file photo)
The LKDFN’s financial arm, Denesoline Corporation, hired Barlas as its CEO in 2014, also in charge of related companies Tsa Corporation and Ta’egera Company.
Lutsel K’e is a fly-in community of about 300 located on the East Arm of Great Slave Lake.
Barlas’ CEO position was based in Yellowknife, but he would have the use of the corporate house in Łutsël K’é. He would also have the use of corporate vehicles in both Łutsël K’é and Yellowknife.
Barlas’ compensation was set at $170,000 with a discretionary bonus between 10-and 35-per-cent of annual salary. It eventually climbed to $221,000, plus other perks.
In a separate decision this week, Justice Shaner allowed the LKDFN to proceed with lawsuits against Edmonton law firm Reynolds Mirth Richards and Farmer, four of its lawyers, and accounting firm KPMG.
