Billions in federal contracts given to supposedly 'Indigenous' businesses with no proper verification

The Canadian government awarded billions in contracts to Indigenous businesses without requiring proof of status. Until 2022, the program that helps Indigenous businesses land contracts, the Procurement Strategy for Indigenous Business (PSIB), relied mostly on an honour system.

Indigenous Services Canada (ISC) and the departments which preceded it dating back to 1996 did not always demand status cards or other documents from companies until 2022, a federal spokesperson said.

Liberal Senate appointee Charles Adler earlier called Indigenous people uncivilized “boneheads” who should “get a job.” His remarks on Radio CJOB Winnipeg prompted a formal complaint by the Assembly of Manitoba Chiefs, records show.

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The Trudeau government has directed significant funds to Indigenous businesses, but issues with the PSIB have persisted. Members of Parliament have criticized the PSIB for negligent auditing practices, potentially allowing non-Indigenous businesses to exploit the system.

“In the absence of consistent scrutiny, the joint investigation revealed widespread reports of non-Indigenous enterprises using questionable methods to get around the PSIB’s minimum requirements. The program stipulates that Indigenous peoples must have 51 per cent ownership and control of the business,” reads an extensive report from Global News.

Reports indicate that non-Indigenous businesses have used tactics such as hiring Indigenous-identifying individuals as figureheads or using Indigenous companies as fronts.

Concerns about these types of “shell companies” and other fraudulent practices have been raised since 1999, though no action has been taken by the ISC to close these gaps.

Vetting for who qualifies as being Indigenous are not clear, Indigenous Services Minister Patty Hadju told CBC in February.

The number of contracts awarded to Indigenous businesses rose dramatically from $100 million in 2018 to $1.6 billion in the 2022-2023 fiscal year. A significant portion of these contracts went to Ottawa-area IT consulting firms, raising questions about the concentration of Indigenous businesses in that region.

The Trudeau Liberals created the Office of Supplier Integrity and Compliance in an effort to address these issues.

Despite this, concerns still loom large over so-called “rent-a-feather” arrangements, where non-Indigenous businesses pay an Indigenous individual to falsely appear as owners.

“In such a deal, a person who identifies as Indigenous agrees to sign on as a non-Indigenous business’s purported owner in exchange for a small percentage of a contract or for a flat fee, rather than actual ownership of the company. Deliberately giving any misleading information to federal procurement workers is illegal,” reads the Global report.

The department’s spokesman responded that Indigenous Services Canada is working with First Nations, Métis and Inuit leaders to transfer control to Indigenous organizations, though it is not yet known who will take the reins.