A former Shubenacadie band councillor wants to know why more than $250,000 of band money was transferred to a private company without the council's approval.
Alex McDonald's concerns centre on a company called MRJJ Management Inc. In June, the company was issued a cheque for $277,317.42 bearing the signature "Jerry Sack."
Jerry F. Sack is the former chief and one of the shareholders of MRJJ.
Sack, McDonald and the rest of the council lost their jobs last week after federal officials uncovered election fraud. The council was dissolved.
McDonald said he found out about MRJJ when he dropped by the band office one day in June. He said Sack told him he had never heard of the company before.
"We did not give them permission to start a bank account," said McDonald. "We did not give them permission to take funds from anywhere in the band office and start this account or even use those funds for travel, for anything."
MRJJ was founded in early January, according to the Nova Scotia Registry of Joint Stock Companies. Truro lawyer Gary Richard, the band's lawyer, is listed as MRJJ's recognized agent.
Company of convenience
Richard said the company was set up on behalf of the Shubenacadie band for business ventures in and around the Wallace Hills reserve in Hammonds Plains. He said it's common for native bands to work through a corporate body when acquiring land to add to a reserve.
In the mean time, the company can be used to hold and transfer band funds, even though it has no formal connection to the band, Richard said.
"It was described to me as being for essentially cash flow management, and to have certain transactions done with a level of discretion," he said.
Documents obtained by CBC include a copy of the $277,000 cheque. There is also a financial record for the Indian Brook Gas Bar, which is owned and operated by the Shubenacadie band, that shows money transfers from MRJJ.
There is also a letter that Richard sent to an RCMP sergeant at the Indian Brook detachment explaining the purpose of MRJJ. It identifies Jerry F. Sack, two former councillors and the band's financial director as shareholders.
The letter states that all four men were on a committee set up by the band council to prepare for the development of the Wallace Hills reserve.
No council approval
McDonald said Sack never told the elected band council about MRJJ or the transfers of funds in and out of the gas bar account. He said council usually approves all financial transactions over $2,500.
McDonald wants to know what happened to the money transferred to MRJJ.
"What's it doing there? And who put it there? And where did it come from?" he said.
Another former councillor confirms McDonald's account that the band council was not told about MRJJ. The former councillor also confirmed the former chief's denial of any knowledge of MRJJ. The source didn't want to be named.
Jerry F. Sack said it's not appropriate for him to talk about band finances now that he's no longer chief. He said he'll wait until the outcome of the band election on Nov. 1.
Last Wednesday, the federal department of Indian and Northern Affairs dissolved the Shubenacadie band council after uncovering voting discrepancies in the June 2009 election.
McDonald wants a new council to commission a forensic audit to look into MRJJ and its dealings.
He said he plans to run to regain his council seat.