[S.I.S.I.S. note: The following mainstream news article may contain biased or distorted information and may be missing pertinent facts and/or context. It is provided for reference only.]
OTTAWA -- The federal government is reviewing its policy on health care transfers to aboriginal communities after a northwestern B.C. band invested more than $130,000 in surplus money in high-risk securities on the stock market.
The Gitxsan Health Authority in Hazelton, which provides services to 2,432 aboriginal people in six communities, bought the securities a year ago and sold them in June after being told by the federal government the investments were imprudent, a senior official in the federal health department said.
The Gitxsan's investment in volatile resource securities came from a surplus totalling just under $300,000, with the remaining money invested in safer investment vehicles such as treasury bills. The most recent GHA financial statements obtained by The Sun and dated February 28, 1998, show it held $110,000 in the securities of three companies, down more than $30,000 from the purchase prices paid in October and November of 1997.
The Gitxsan authority owned common shares of Petrobank Energy and Resources, a junior oil and gas firm, as well as income trust units of Manalta Coal and Pengrowth Energy.
No statements are available after February to determine when the securities were sold, and health authority executive director George Giourard has refused to return several calls from The Sun starting late last week. Williams said he was told the GHA lost $40,000 on its investments.
Resource firms have popularized the sale of income trust units, which pay investors income from a portion of the company's cash-generating assets such as oil wells, providing attractive returns but exposing investors to greater risk because of the volatility of resource prices and production levels.
The stock market speculation has triggered complaints from one of the Gitxsan signatories to the agreement, as well as the Reform MP representing the area, who both charge that the surplus money is needed for health care.
Paul Cochrane, assistant deputy minister in the department's medical services branch, said the $12 million, five-year agreement with the Gitxsan signed in 1995 is silent on how to invest surplus money. The same is true for the 15 other health care management agreements with first nations that cost the federal treasury close to $20 million annually in B.C., he said.
The Gitxsan told the federal government they sold the securities in June, but they did so voluntarily, Cochrane said. "We have now taken that issue [to government lawyers] to see what position we should take on this type of situation, and should we in future look at inserting a clause in the agreement," he said. However, he suggested that strict rules on how to handle finances might run against the government's policy of promoting self-government.
"You're walking the fine if you're saying to somebody, 'it's your responsibility to manage the transfer and your responsibility to report to your community members, and it's the community members' responsibility to be part of the board and give direction to the program,' and then say, 'but at the same time we're going to give you all these rules and regulations,'" Cochrane said.
The Gitxsan Health Authority's investment practices were challenged by Ottawa after Reform MP Scott (Skeena) began voicing concerns being expressed by one of the parties to the agreement. Scott's letter to Health Minister Allan Rock in early June prompted the government to ask health authority executive-director George Giourard on June 25 to sell the securities. Giourard told the department's B.C. office the next day that was taking place.
Scott told the Commons last week that some Gitxsan people are going without important health services while the money sits in an investment account with Stephen Avenue Securities Inc. of Calgary.
Rock didn't comment on the matter last week, but a letter to Scott last month pointed out that the health authority has demonstrated "good financial management practices."