The chief of the Liard First Nation in Watson Lake, Yukon, is refuting an accounting firm's statement that the First Nation used federal housing money to buy some local hotels.

Chief Liard McMillan said the $2.8 million from the federal Northern Housing Trust, which was given to the Liard First Nation through the Yukon government to improve First Nations housing, was used for that purpose.

McMillan was responding to a Whitehorse accounting firm statement, obtained by CBC News, that said the First Nation used the money to buy three Watson Lake hotels from a company that was partially owned by Yukon cabinet minister Archie Lang.

"Subsequent to March 31, 2007, the Liard First Nation Development Corp. purchased three hotels in Watson Lake, Yukon, using funding provided to the Liard First Nation by the Government of Yukon under a Northern Housing Trust established by the Government of Canada," according to a note that the accountants included with the First Nation's financial statements for the 2007 fiscal year.

"A portion of one of the hotels is to be used as housing units by the First Nation."

But McMillan said the accountants were misinformed on the matter, and he can prove that the government funding was used to build and renovate a number of First Nation houses.

"We've built over nine houses since receiving that money, there's three more under construction this year," McMillan said, adding that 36 additional houses have been renovated.

"We still have more to do with the help of the Northern Housing Trust money," he said.

Hotels bought with mortgage

McMillan said the First Nation's development corporation did buy several properties from Lang's company in 2007, but that was done under a separate transaction for investment purposes.

A land titles search confirms that the three hotels were purchased using a mortgage.

Both the hotel purchases and the First Nation's spending of the housing trust money are above board, McMillan said.

"These business transactions are appropriately recorded on paper and have been drafted by our lawyers and approved by both the board of directors of our community development corporation as well as chief and council," he said.

The First Nation itself did use the housing trust money to buy a motel unit located adjacent to one of the hotels, but McMillan said that property is intended to be used for an assisted-living facility and low-cost housing.